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December 21, 2024 | Trading Desk Notes for December 21, 2024
Animal Spirits experience an Icarus Moment as the adrenaline rush from Trump’s election victory fades. The NAZ rallied ~28% from early August lows to this week’s all-time highs, with nearly half the gains made since Trump’s election victory (circled.) The NAZ was up ~60% from October 2023 and was “by far” the best-performing stock index over […]
December 14, 2024 | Trading Desk Notes for December 14, 2024
What would a turning point in Irrational Exuberance look like? Well, for a start: Some analysts say that retail is the most bullish ever. I don’t know how you measure that, but yeah, it feels that way, and retail is gambling on all kinds of crap – exchange-listed or otherwise. The COT data as of […]
December 7, 2024 | Trading Desk Notes for December 7, 2024
Tech stocks led the indices higher this week. AAPL hit new record highs, up ~11% in a month and ~50% in eight months. TSLA had another good week, up ~56% since the election and 2.8X in the last eight months. AMZN is at record highs, up ~15% since the election and ~50% in the last four […]
November 30, 2024 | Trading Desk Notes for November 30, 2024
Trump shocks markets: he will hit Canada and Mexico with 25% tariffs on ALL exports On Monday afternoon, November 25, Trump announced that on his first day as President, he would levy 25% tariffs on ALL imports from Canada and Mexico – if they did not halt the flow of illegal migrants and dangerous drugs into the […]
November 23, 2024 | Trading Desk Notes for November 23, 2024
American exceptionalism: US stocks have hugely outperformed the rest of the world. The S&P is up ~46% from its October 2023 lows. It jumped ~5% during election week, the biggest weekly gain YTD, corrected a bit last week and rallied again this week. The NAZ is up ~51% from October 2023 lows. The NAZ has […]
November 16, 2024 | Trading Desk Notes for November 16, 2024
Stock indices, interest rates, and the USD rose sharply last week following Trump’s victory. This week, stock indices fell, interest rates rose, and the USD soared to 12-month highs. NAZ futures hit record highs during the Sunday overnight session, up ~6.5% from election-day (circled) lows, but gave back ~63% of those gains by Friday’s close. SOXX […]
November 9, 2024 | Trading Desk Notes for November 9, 2024
US stock indices soared on Trump’s victory—the DJIA, S&P, and NAZ rallied to new record highs this week. The S&P and the DJIA hit record highs in mid-October but then trended lower into month-end, perhaps de-risking ahead of the election. On election day (ellipse), the indices were bid aggressively from the opening bell, soared in the […]
November 2, 2024 | Trading Desk Notes for November 2, 2024
Bond yields have risen sharply since the Fed cut short rates on September 18. When the Fed cut rates in September, the 10-year yield was ~3.6%, an 18-month low. It was ~80 bps higher at 4.4% at Friday’s close. In October 2023, the yield was ~5%, a 16-year high. In this daily chart of the 10-year […]
October 26, 2024 | Trading Desk Notes for October 26, 2024
US interest rates have surged higher since September 18, when the Fed cut short rates by 50 bps. US 2-year yields were near a 22-month low of ~3.63% on September 18 but closed this week at ~4.12%. In this chart of 2-year Treasury futures, the blue ellipse is September 18, and the black ellipse is October […]
October 12, 2024 | Trading Desk Notes for October 12, 2024
The leading North American stock indices are at record highs The S&P has closed higher for 9 of the last 10 weeks, rising ~14% from its early August lows. The index is up ~22% YTD, ~41% from year-ago lows, and ~65% from two year-ago lows. It has closed higher for 11 of the last 12 […]
September 28, 2024 | The Trading Desk Notes for September 28, 2024
Traders are more interested in the market’s reaction to news than the news itself. This week’s news flow felt like a tsunami after the dog days of summer, but for the markets I trade, the big news was the monetary and fiscal stimulus in China, the acceleration of Israeli attacks on Hezbollah, and the shift in […]
September 21, 2024 | Trading Desk Notes for September 21, 2024
The Fed cut 50; here’s a quick take on how different markets reacted The Notes will be brief this week. I’m hosting the Moneytalks show and playing in the Oceanside Special Olympics golf tournament, and we’ve got a houseful of guests who will be golfing with me. The golf tournament is fully booked, which […]
September 14, 2024 | Trading Desk Notes for September 14, 2024
The S&P had its best week of the year this week; last week, it had its worst week in 18 months. Do you want to bet on next week? The S&P fell ~4% last week and bounced back ~4% this week. The S&P ended last week right on its lows. It rallied back on Monday […]
September 7, 2024 | Trading Desk Notes for September 7, 2024
The S&P fell over 4% this week, its worst weekly performance in 18 months The leading American stock indices fell every day this week, with the S&P giving up ~50% of the gains made during the rally off the August 5 lows. The weekly S&P chart shows a classic bearish “double-top with lower 2nd high” pattern. […]
August 31, 2024 | Trading Desk Notes for September 31, 2024
The bloom is off the AI rose; capital rotates to other sectors Wednesday’s NVDA quarterly report was strong overall but failed to meet investors’ high expectations; the share price closed the week near its lows, down ~15% from the record highs made in June. The robust gains from big-cap tech provided most of the gains for the […]
August 24, 2024 | Trading Desk Notes for August 24, 2024
Powell says the time has come to begin cutting interest rates Markets were expecting Powell to announce that it was “time” to start cutting rates (to lessen the downside risks to employment – the other leg of the Fed’s dual mandate), but the “unequivocally dovish” tone of his Jackson Hole announcement surprised markets. Small caps […]
August 10, 2024 | Trading Desk Notes for August 10, 2024
Mean reversion was nasty on Monday, but mellowed by Friday The Nikkei plunged to a 10-month low on Monday, down ~28% from July’s record highs and down ~20% in three trading days (the sharpest decline since the crash in October 1987.) By Friday’s close, the Nikkei had rebounded ~15% to close slightly higher on the […]
August 3, 2024 | Trading Desk Notes for August 3, 2024
With the NAZ down ~12% since the July 11 record highs, do we bounce or keep falling? The NAZ closed lower for four consecutive weeks and closed this week at 18500 (which may be an essential support level), the lowest close since May 14. Perspective: At the July 11 highs, the NAZ was up ~20X from […]
July 27, 2024 | Trading Desk Notes for July 27, 2024
Reversion to the mean continues across key markets Big-cap tech stocks fuelled a ~50% rally in the NAZ (~39% in the S&P) from October to July; their recent weakness contributed to the NAZ falling ~10% (S&P ~5%) from record highs. The MAG7 market cap is down ~$2 trillion (~12%) since July 10. The Russell 2000 […]
July 20, 2024 | Trading Desk Notes For July 20, 2024
Risk assets had a key turn date When several markets reverse course on or around the same date, I define that as a Key Turn Date (KTD). It signals a (profound) change in market sentiment/psychology/positioning. My favourite barometer of risk sentiment is the S&P 500 Index. S&P futures (and the cash market) closed at a record […]
July 13, 2024 | Trading Desk Notes For July 13, 2024
Do you believe in mean regression? The NAZ is up ~50% from last October’s lows, 100% from the 2022 lows, and >200% from the 2020 lows. It’s up ~20X from the 2009 lows. At what point does mean reversion kick in, or does that never happen? The S&P has closed higher for 11 of the past […]
July 6, 2024 | Trading Desk Notes For July 6, 2024
Big-cap tech leaves the rest of the market behind The NAZ closed green on each of the four days markets were open this week, once again powered by Big-cap tech. It is up ~21% YTD. The Russell 2000 closed lower this week and is slightly lower YTD. The DJIA, which includes AMZN, MSFT and AAPL, is […]
June 29, 2024 | Trading Desk Notes For June 29, 2024
The bond market had a bad Friday This week, price action across asset classes was “mid-summer quiet” ahead of Thursday’s Presidential debate and Friday morning’s PCE report. There were no dramatic market moves immediately following the debate, and the PCE data early Friday was pretty much as expected, perhaps even a shade “benign” in that […]
June 22, 2024 | Trading Desk Notes For June 22, 2024
NVDA goes to the top of the market cap leaderboard The total market cap of NVDA, MSFT, and AAPL is now over $10 trillion. NVDA, MSFT, GOOGL, AMZN, and META collectively are up ~45% YTD, representing ~25% of the S&P market cap and ~60% of S&P YTD gains (NVDA alone accounts for ~35% of the […]
June 8, 2024 | Trading Desk Notes For June 8, 2024
Check your old-school assumptions at the door Market sentiment has been oscillating between believing that “higher for longer” is 1) dead or 2) will be indefinitely sustained. The oscillation frequency has shrunk from months (during the October to February period) to days (since mid-April), and this week, sentiment swung from pillar to post between Monday and […]