September 2020 – Red Pill Quants

The New Normal

Had I read a book last year depicting the events of 2020 up to date I would have probably laughed out loud and insisted that such a scenario was safely in the domain of conspiracy theorists. As this is not a political blog I prefer to keep pertinent opinions to myself and this post will be no exception. Rather it serves as an avid reminder that dramatic events or situations we consider to be ‘impossible’ or ‘unrealistic’ seem to be occurring much more frequently than probability theory would suggest.

The Squeeze Is On

Last Friday I warned my subs to not yield to the bearish exuberance peddled across the financial MSM and to instead consider exploratory positions in select tech related symbols. Like the rest of you I don’t have a crystal ball. But what I do have is access to over half a century of statistical data which strongly suggested that week #40 had good odds for a short squeeze. At least judging by the overnight session a first attempt to bang the open into a gap appears to be in the works.

Another Nefarious Plan

The Brotherhood Of Organized Market Megalomaniacs (BOOMM) has informed me that I have not been acting sufficiently nefarious as of late. Well that all ends today as market conditions have finally opened a door to claiming my well deserved share of ill-gotten gains. In somewhat related news I am currently looking for a small number of well trained minions willing to do my egregious bidding.

Mixed News For Bears

I’m aware that I may be eating my words in the not so distant future but alas: I just took a gander at my market momentum charts and none of them are even close to bearish territory, quite on the contrary. In fact what I’m seeing at the current time is simply the natural process of correcting a market that got a wee bit ahead of itself in late August.

Eye Of The Volatility Storm

Welcome to the worst trading week of the year, at least historically speaking. I looked very hard but there really isn’t much good to say about week #39, which incidentally also marks the beginning of the fall season (starting tomorrow). At the same time however volatility (of the realized kind) is much subdued this week – in fact it’s the least volatile in all of September.

Staring Into The Abyss

Once again the week started out with an attempt to ignore seasonal bias but then slowly degraded as time went on. Let’s be clear, the bulls had a perfect shot at recovering the ball and controlling the game again but then fumbled only yards from the end zone. Looking at the overall market it’s easy to assume we’re only looking at second dip buying opportunity but if we did a bit deeper things are looking a lot less optimistic.

Knocking On Heaven’s Door

The E-Mini futures have been advancing higher in the pre-session and we are now approaching the crucial inflection point I have been highlighting for the past few sessions. It’s probably no exaggeration to say that what happens today will most likely affect the remainder of this month going all the way into the presidential elections.

Skewed Coin Flip

Navigating this week is going to take some finesse as the market is giving us more conflicting signals than a teenage girl on her first date. First up the main key to survival and – better yet – prospering in high volatility market environments is to not attempting to find order where there is chaos, to not fill in a gaping chasm of confusion with your own personal opinion. If you have the mental discipline to do that then – congrats, you’re already way ahead of over 90% of all market participants.

Icarus Has Fallen

Things are not looking so hot for equities at the moment. In my Wednesday post I highlighted the notion that the strength of any bounce that would eventually materialize serves as a litmus test for what the fall season most likely has in store for us. Given the fact that two consecutive rally attempts did not exceed the 100 handle mark and were met by instant reversals does not bode well for the remainder of the month and going into September.

Follow Through

The weekend fears of a many retail bag holders turned into reality yesterday when last Friday’s sell off was amplified by continuation at the tail end of a lackluster low participation session. The main thought circling around in everyone’s inflamed amygdala right now is whether or not we have reached selling exhaustion or if there will be more follow through in the days and perhaps weeks to come. The short answer to that is – yes, and no.

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Monthly Archives: September 2020