by Gavin M.
I'm happy to say that this spring's training blitz is off to a good start. Corey and Mike are having good student numbers in their classes. I have to say though, we have more forex students than stocks. Perhaps that's the sign of the times we have. It's really good to see people who care deeply about the markets and their financial freedom to take the next step and learn from experienced traders.
We would never call ourselves experts nor pros. I despise those two words. Being called an expert makes me feel like I can never do no wrong. I can and will make mistakes in my trades and that is the reality of being a trader. Our training drive is going on until the end of September. The earlier you take the classes, the better positioned you will be when fall comes.
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by Gavin M.
Of the 1% of us traders who still worry about macro events and trade the world of forex, futures and bonds, it really continues to be a roller coaster. Let me begin with the most significant yet will be gradually downplayed prospect of a FED rate hike. When you have multiple data points conflicting each other, how do you position as a trader?
All the data and news can drive a trader into madness. This is why you figure out a strategy and manage your positions from there. I have taken the stand that they will NOT hike this year. So far, my trades have done pretty well in the forex world with that stance. The EUR bounced hard this week only to be sold off after Friday's unusually good US CPI number. But nobody still knows if the FED will really raise rates.
We then move across the pond to Europe. Yes, that continent that continues to put up a show that they're united but in reality, they are ruled by Germany. France likes to think they have some pull but they are just Germany's little sidekick. We do not know if Greece will stay or go. For posterity's sake, the EU wants to really prove to the world that they will save Greece 'whatever it takes'. I liken Greece to a sick heifer. Either put her out of misery or just leave her to live out her last days in isolation. Greece will get its Gotham moment. It has to be destroyed before it can rebuild itself. At what point will the EU truly realize that Greece is a lost cause?
Traversing further east, we now have China. China's ridiculously high stock markets are really remarkable. They popped the real estate bubble, so now they are making the stock bubble even bigger. I am truly impressed that despite Chinese regulators warning the citizens that they are reaching bubble levels, the populace does not care. It is the "nothing could go wrong" attitude that will eventually take a lot of these stock markets down from their lofty valuations. But, not yet. As sure as a tsunami gets big before it recedes, stock market booms must reach that ultimate peak before it can trough.
We have plenty of geniuses on both sides of the argument. Some have argued these markets are going to crash this year. Some have argued the bull market is still strong. Ultimately, only one group will be right but so far, the bulls are winning. Therein lies the conundrum majority of us macro traders face each day. Do we place large directional bets? Do we believe one group's arguments over another's?
In the end, it is all about focusing on what is important to you as a trader. Quieting the noise and figuring out what is profitable right there and then. There is power in being small. The advantage of being an individual, retail trader is that you can position yourself small without the pressure of impressing your clients. There will always be money to be made, just make sure you side with money and not with stupidity. And yet, sometimes those two go hand in hand.
by Gavin M.
I am too lazy to put up the chart of this one stock so I will not post it. I am sure you already have an inkling of what it is. It is the stock that everyone, including their grandmothers, own. It is Apple Inc (AAPL). This week has provided a few countertrend trades on AAPL but the overall direction was up. Selling AAPL would have been quite destructive to your trading account as it moved past the barriers at 128 all the way now to 132.
It is amazing really that if you compared either the NASDAQ or the SPX to the AAPL on the same chart, you will see that the moves were due to AAPL for the most part. When AAPL hit a resistance and would fall 20-40 cents, the SPX would also take a serious turn. Perhaps it is because of Carl Icahn and perhaps it is the algorithm responsible of keeping the "Dream" alive that has made AAPL propel back to recent ATHs.
Even as a bear, I know when I should not try to stand in front of a crazy bull train. Do take note that AAPL is the most owned stock, not just in the US, but also in the world. The SNB has definitely confirmed this month it is a big holder of Apple shares. I would not even hazard a guess as to how much the GPIF owns. But when you have hedge funds, government pension funds and central banks owning Apple, you really have to ask yourself whether it is time to give up trading it. You can not fight a river with a strong current. You either swim with it or you find something else.
Surely, the best way to trade AAPL is to keep buying the dip. With our clients, I do try to be balanced. I tell them not to short and I actually tell them when they should be bullish on a stock, forex or a future. Last week really made me think hard about shorting AAPL right now. Maybe this is the reverse indicator. The fact that I am resigning from shorting could be the time to short AAPL (ha!). I do have to concede to the bulls these past few weeks. They have been relentless and have made more money than me in going long this stock.
It is a skill as a trader to be versatile. You must not let your own emotional disposition distort your trade strategies. While I will never find myself buying AAPL shares or Calls, I also will just stand aside and not short it. There will always be a time to short a stock no matter how bullish its movement can be. It may take days, weeks, months but sooner or later, buyers will be exhausted.
Even with my bearish mentality, I find stocks to short on a daily basis. There is always the VIX to monkey hammer. There are always SPY Calls to short or SPY Puts to short. Perhaps I may even just sell AAPL Puts! Of the thousands of stocks out there, always find your niche. As for me, my play is always on the sell side. There is always a security out there that is on the verge of falling. Take Twitter for example.
Until the, BTFD on AAPL kids!
Traders from Equity Sense will be writing on this blog on positions and other market-related things.