Blog – Page 38 – Red Pill Quants

0 Dirty Capitalist Pig’s Guide On How Bull Markets End

All political and social drama notwithstanding dirty capitalist pigs like us have been doing rather well throughout 2019. So the big question going into 2020 is whether or not we are finally ‘due’ for a large scale market correction upon which we are finally ready to embrace the new socialist utopia lurking at the horizon. Don’t ask me because I’d probably the first one in line being handed a cigarette plus a blindfold and as such I may be somewhat biased.

0 Launching The Decade In Style

The teens are over and done with and we’re now heading straight into the roaring twenties. I know it’s supposed to be hip to be all cynical and black pilled these days; but let me be among the first to buck this nauseating trend and predict that it’s going to be an awesome decade for anyone serious about being successful – and most importantly the very few willing to put in the work.

0 Merry Christmas!

I’m pretty ecstatic this morning! And although the prospect of a looming EOY holiday week may play some part, the main reason for my emotional exuberance is that I’m putting the finishing touches on a project that combined has taken me nearly 2 years to bring to fruition. It’s been a monster effort that launched in early 2018 has cost me literally 5000+ man-hours of hard work to get to this point.

0 VIX Buy Signal Triggered

This is the first time I recall a VIX Buy Signal following a Sell Signal in such short succession. Can it be trusted? Did I miss the pre-Santa-Rally dip? Is it too late to load up on long positions? So many nagging questions but as usual Mike’s got you covered:

0 Reset Your Market Perspective

Most retail rats launch their trading endeavors (calling it a ‘career’ would be a vast exaggeration) by voluntarily checking themselves into a financial industry indoctrination camp where they are force fed a corrosive diet of nonsense such as magic candle patterns, Elliott Wave theory, moon phases, solar cycles, Bradley Turn Dates, Hindenburg Omens, etc.

0 Traditional Bond Traders Overrun By Quant Traders

Once again, the ability to code is trumping all other skills, again lending credence to the “learn to code” joke that came off as so harsh to the liberal social media elite that it wound up getting people banned from Twitter.

But the adage is holding true in the bond market, according to Bloomberg, where quants are now striking it rich with the ability to code. The bond market is getting “wired up by systematic players” and firms are scrambling to scoop up the best talent.

Hedge funds are stealing each others’ talent and trying to entice employees with robust compensation packages. For instance, credit-quant clients at Selby Jennings in London are offering annual compensation of $400,000 to a Ph.D. graduate with five years’ experience as a desk strategist.

Read the rest of this article over on ZeroHedge.

0 Storm Clouds On The Horizon

I’d wager that the majority of retail traders chose to listen to the onslaught of bearish siren calls peddled in the MSM over the past two months, once again causing them to miss out on yet another massive push to the upside.

As we’ve now advanced all the way into new all time highs you may wonder if at least an obligatory shake out may be in sight. Let’s see what my market momentum charts have to say about it.

Let’s start with Mr. VIX – despite all time highs the 12 mark has yet to be broken and IMO the bulls require a drop < the 11.8 mark in order for the rising trendline above to be broken.

There are of course no iron clad rules that were handed down to Moses about any of this. But it has become clear now that we have built a new IV base over the past two years and investor confidence is needed in order to abandon the high volatility market regime that has reigned since early 2018.

0 IVTS Getting Steam Rolled

Sunday night market update on IVTS

0 Markets And Volatility

By all definitions the past two years have been pretty challenging to many retail traders and not surprisingly the exhaustion I sense in the comment section is palpable. A lot of what has transpired can be attributed to a marked increase in realized volatility which over time has contributed to a now permanently elevated baseline in implied volatility.

I’ve covered that phenomenon in my various long term market updates but today I would like to take a step back and hopefully squash a number of misconceptions about market volatility and also address how it may affect your trading reality.

However, people talk about ‘volatility’ all the time and often mean completely different things. So before we move any further we need to establish a clear definition of what volatility is and how we can measure it. To that end let me to walk you through the basics.

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