Biden’s confirmation of Janet Yellen as the Fed chairwoman 2.0 pretty much sealed the fate of the U.S. Dollar and I expect it to be renamed the ‘U.S. Weimar’ just before its replacement by monopoly money which it appears to be more resilient against haphazard inflation. But to be honest a crashing Dollar is par for the course for a nation that is incapable of holding a presidential election without certified results over one month later.
Everything but the U.S. Dollar seems to be ramping higher these days. Bitcoin is back over $19k with HODLERs projecting it to be at $30k sometime next year. The smugness in the crypto waterholes I monitor is literally oozing out of everyone’s pores. Continue reading
I take it that most of you folks are either already getting juiced up on mulled wine or busy preparing for whatever Thanksgiving gathering will be permitted in your locality this year. Here in Spain Thanksgiving ain’t really a thing but that didn’t keep Mrs. Evil and I from cooking up a big pot of ‘Glühwein’ (mulled wine) and hunting down the juiciest looking turkey our local ‘Mercado Central’ had to offer.
What is the first thing you look at on Monday morning before the trading session opens? Most traders attempt to get a ‘feel’ for the market by tracking one or more futures contracts related to equity indices. So most likely we’re talking about the ES, the NQ, or the RTY which is the new CME contract for the Russell 2000. I personally mainly focus on the former two but always keep an eye on the RTY as it sometimes provides early clues of divergence. But before doing any of that my first go-to charts are my weekly statistics. Why is that?
I often wonder whether or not Albert Einstein would have been a good trader, given his IQ of 160 and his ability to correlate seemingly mundane observations and twist them into a mind bending theory related to the inner workings of the universe. Odds have it that he most likely would have laughed at the question and balked at wasting his intellect at a silly endeavor such as predicting future price action.
With the S&P 500 mostly treating water this week the big question in my mind was what the heck is driving the Russell to advance higher as if being juiced by a double dose of Martin Armstrong’s Tour de France special. Time to lift up the market’s skirt and dive in for a closer inspection.
The option market continues to do a horrible job in handicapping risk which is evidenced by the fact that expected move ranges all across the board are repeatedly being taken to the woodshed. We’ve got a situation now in which IV is steadily trickling lower whilst blatantly ignoring the wild moves we keep seeing all across equities. In conjunction with what I’m seeing in the VX futures and other pertinent measures this presents us with a juicy EOY trading opportunity I call ‘the taking candy from a baby’ trade.
Try to say that one three times in a row – heck, I tried! Anyway, it’s now ten days post election election day and we still do not have an official tally (don’t start with me!) and vote by the electoral college. The market isn’t liking this limbo situation one bit as trading whilst strapped to a chair with a Damocles sword dangling over your head isn’t exactly anyone’s definition of wholesome entertainment. Plus it seems everyone’s getting tired of the endless drama and just wants 2020 to be written off as a the year you shall never speak of again.
After many years I rewatched the movie Saving Private Ryan with the Mrs. the other day and must admit that the first ten minutes of the movie almost brought me to tears. I know this may sound a bit strange coming from a born German – after all we are the baddies in the story. But as some of you may recall I became a legal U.S. citizen about a decade ago after a long arduous and costly process. Besides after not having set foot on German soil for almost 30 years now I feel a lot more American than I ever felt German when I grew up there. After all it was the United States of America and not Germany that afforded me the freedoms and opportunities to pursue my hopes and dreams and for that I will be eternally grateful.
The market seems to be going through a manic depressive phase right now which is increasingly affecting its ability to handicap risk. This was to be expected to some extent given the turbulent times we live in. But there’s a lot more to this and in essence it all boils down to the growing contrast between two clashing world views, with Wall Street apparently ready to go back to business as usual while Main Street finds itself mired in a political cold war that may extend far beyond January 20th and the inauguration of the 46th president of the United States.