Stock Market Discussion, Chat About the Latest Market Action

[socaldude]

I have no idea what they are talking about, but they seem to have a large following.

Not many people know how to trade the VIX. I think I know. Funny thing is I got my insights from a dream. Yes, a dream. I saw myself in perfect third person looking at a computer screen. Very rare moment/experience.

 

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[loop101]

My favorite bear is back: https://twitter.com/michaeljburry

 

[ZF Lee]

My favorite bear is back: https://twitter.com/michaeljburry

I wonder now if anyone from r/WSB will try to inverse Burry...

That being said, its just not enough to do something as simple as 'do the opposite of the crowd' or 'buy in blood' or whatever. We need to look into 'what then?' and the consequences of the forces at work...second-order mental model.

 

[ZF Lee]

A rant:

Recently Jon Stewart opened up some series on discussing GME and how the stock markets are totally unfair for retailers.

You can find some excerpts on YouTube here, full show's on AppleTV:

View: https://www.youtube.com/watch?v=-Eyo0u4_sYI

View: https://www.youtube.com/watch?v=bP74RBTE8kI


Then I got Tom Sosnoff's email via the TastyTrade broadcasts:

Spoiler: the email writ:

I am choosing today to write about trading. Why? Because in the worst of times, our markets work. Faced with global turmoil and a literal shitstorm of unknown risk, the stock, option, and futures markets in the US remained a tick wide and afforded the world a huge amount of around-the-clock liquidity.

That brings me to challenge all the naysayers. The WSJ, CNBC, Michael Lewis, and even Jon Stewart, have all tried to jump in on the ‘market is unfair’ for individual investors rhetoric. I am most sad about Jon Stewart and his huge loyal following. I love Jon Stewart. He’s a comedic genius and a brilliant speaker.

However, when it comes to trying to articulate what’s wrong with the stock market, it’s painful to listen to him. I’m sure his heart is in the right place and I’m sure he means well.

Unfortunately, I’m also willing to bet a lot of money he’s never traded or used any of the products he talks so passionately about. I am also sure neither have any of the industry experts he uses to validate his thesis. I only bring up his name because Jon is the latest big-name personality to miss the mark when it comes to explaining HFT, PFOF, and the democratization of finance. I hate to burst everyone’s bubble but Reddit, Wall Street Bets, and Robinhood did not democratize finance.

Let’s not confuse speculative opportunity and generational demand with any other more noble cause. The meme stock era woke up a generation. Just like the dot com era woke up a prior generation. As for the so-called villains, Ken Griffin and Citadel are not alter boys but they are not the devil either.

They just do what they do better than Goldman, Deutsche, Citi, Morgan, TD Bank, and the hundreds of other market makers who failed trying to capture market share.

Also, remember that it was Citadel who bailed out E*trade when they were about to fail and it was Citadel that bailed out many other prop firms blowing up in an effort to maintain market stability. But trust me, I’m not a Citadel apologist. Also, on the topic of payment for order flow, contrary to popular belief, stock payment doesn’t make brokerage firms like Robinhood rich. For example, if 1000 customers each trade one share of stock, Robinhood will receive about $1.50 total in PFOF. I doubt anyone would think that’s a good business model.

So I’m sorry Jon Stewart and others, but if you want to pick apart an industry, try some marketplace that is not efficient and actually does rip off customers. A $100K bet at any sportsbook in America carries a two-sided vig of $5K not including the incredibly wide bid/ask spread. A $100K bet in the stock market has zero cost and a $2 bid/ask spread round-turn. That’s the beauty of HFT market-making.

Before HFT, the various exchanges including the NYSE would make wide markets and gleefully rip customers off. With no recourse for bad markets and bad fills. Now, it truly is a level playing field thanks to HFT and PFOF.

But, why should you believe me when you have industry experts telling you otherwise.

So, here’s my offer to you Jon: email me at tom@tastytrade.com and I’ll gladly fund an account for you so that you can trade stock, options, futures, and crypto for yourself. It’s my own money so there’s no risk for you whatsoever. After you have made 10, 20, or 100 trades, doing whatever it is you want to do, then tell us what you think. I’m putting my money where my mouth is….

This had me thinking...and reflecting on my own past stock trades as well.

I guess what Sosnoff was trying to say was that...we can still choose. And our choices on the markets, be it what stocks we buy/sell, their prices, the options...are already better than what we have before.

We can also choose our choice of strategies...we can set some stop-losses, Darvas boxes, MJ's selling options, etc.

I got the feeling that folks were piling on the GME saga to hate on whatever forces were turning their trades into losing ones. So the Stewart shows might just be a means for folks to support a self-confirmation bias that it wasn't their fault that they lost in stocks... it's the market-makers' and banks' fault.

Last year when I started stocks more seriously, I made tons of mistakes. Did many newbie mistakes like just buying in hot sectors, or based on hearsay without set exit plans averaging down on bad trades. Or not following TA rules...not understanding how support/resistances could be kill-grounds for smart money, etc.

It took me months to reposition my trades after finding some Telegram folks who advised me lots (we had a few TG groups that spawned in the wake of GME)...but still the IRR returns are red since I didn't add more cash to the account. I'm still focused on slowly cutting losers on rebounds and adding winning positions.

I got to see one of the Telegram bosses' portfolios on a local forum. He had 8 stocks, most of them 9-24% in red...but it was only 3% down overall even in the current market red because 1 of them (50%+ profit...he invested in Petronas, the country's top petro-chemicals manufacturer) were in oil & gas...they held up the rest. It's like Greenblatt said: Out of 10 you pick, only 1-2 will be the real winners. Very similar to the number of Fastlane ventures we might attempt.

And when I compared it with my portfolio, I realised 2 of my picks ( in metals, one of them is still 25% up, the other I'm still buying up) were hugely green as well...and I had cut off quite a number of loser stocks better than last year. In time, my portfolio would recover.

But how many folks would have found the time, cash and energy to do their best to master the markets?

At best...they just buy a course or follow a guru to grab some intraday tips. Or some advanced TA screener or indicator. Or just resign themselves to loading up on index and mutual funds so they can 'sleep better' . Or just sell everything and walk away- swearing to never do stocks again.

By doing all these...will they achieve mastery in stocks?
Mastery to learn all about the choices...and to make better decisions?

So I find that investing/trading have very similar themes with Fastlane entrepreneurship...we need some time and capital to make some initial errors, learn from them, and do better...even if that process takes months or years.

Some folks say, 'Oh, I'll just learn to invest/trade after I get the Fastlane millions'.
I find that this is one attempt to delay a key weakness.

My folks gave me extra money on birthdays to invest...and I'm going to say that more money DOES NOT help you make better decisions in the markets ( or business for that matter).

Capital...is just capital.
I was lucky to have divided up my capital into value stocks, and much smaller into the more speculative plays...and held back cash. But not every young chap has such restraint.

We NEED to know what we are gonna use the capital for...and I find we can only learn it by actually dabbling in the markets. That means actually doing the DD on the options/stock of choice...putting money to work...and study the results.

 

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[socaldude]

how the stock markets are totally unfair for retailers.

Lol ever hear Tom Sosnoff say how retail traders have the edge? I always scratch my head when he raves how these markets are helping retailers. LOL

 

[ZF Lee]

Lol ever hear Tom Sosnoff say how retail traders have the edge? I always scratch my head when he raves how these markets are helping retailers. LOL

I guess he just wants more folks to use TastyTrade haha.

Too bad they don't have paper trading for practice though...unlike TD.

In other news...finally they jumped the gun:

US strikes harder at Putin, banning all Russian oil imports

President Joe Biden has announced that the U.S. will ban all Russian oil imports, toughening the toll on Russia’s economy in retaliation for its invasion of Ukraine.

apnews.com

I'm thinking of trying some call warrants for daily scalps on local oil counters. The key here is to pick your oil carefully...in Malaysia, we have upstream (those responsible for actual extraction), midstream (transport and maintenance), and downstream (processing into finished goods & distribution). The best ones to profit are the upstream given the commodity price spikes. And that was the case for my selected metals...they are upstream miners/smelters.

But I'll have to clear more bad bags to free up cash...but I think its OK. Keeping those reds around hoping for a rebound is foolish...considering sector funds flow. I'll just need to take profits diligently on the warrants...similar approach with my SPY scalps (haven't touched it in a long while!)

 

[Bbenn30]

I may be way off base here. Frankly I don't have much invested in the market yet... but here what I see. Currently our market appears to be incredibly inflated. Specifically housing is through the roof. I feel the current war in Europe has the possibility to push certain sectors of the market higher than they've ever been. Especially if this thing kicks off into a full blown world War. But, with all this growth there has to be a correction soon. I'm gonna call it as another housing crash. Thoughts?

 

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[Andreas Thiel]

... But, with all this growth there has to be a correction soon. I'm gonna call it as another housing crash. Thoughts?

Any reasoning why you would expect a housing crash ... rather than an everything crash?
When I play the thought of how things could play out, housing is one of the later markets that would suffer.

---

Has anybody followed the nickel developments?
Just heard that the insane price increases happened due to margin calls and that this might trigger a chain event.
Some big players (I think a Chinese bank) seem to be involved badly enough to need a bailout.
Can't seem to find any articles that cover this, though.

 

[fastlanedoll]

Any reasoning why you would expect a housing crash ... rather than an everything crash?
When I play the thought of how things could play out, housing is one of the later markets that would suffer.

---

Has anybody followed the nickel developments?
Just heard that the insane price increases happened due to margin calls and that this might trigger a chain event.
Some big players (I think a Chinese bank) seem to be involved badly enough to need a bailout.
Can't seem to find any articles that cover this, though.

how far behind do you think the housing market will suffer? haven't been in this super long. does it always suffer along with stocks?

 

[fastlanedoll]

i sell cash-secured puts on tqqq. premiums on leveraged funds are more $$, and even better for me since they split their shares recently.
it's a great fund. qqq will never go to zero short of the end of humanity, so i'm not worried. from what i've seen, the decay seems to be a myth, or IF it does happen, it doesn't happen on an even notieable magnitude.
i sell cash secured puts on it for now, IF assigned, will switch to covered calls. when it goes back above 200DMA, will enter a long position and sell covered calls.

 

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[socaldude]

how far behind do you think the housing market will suffer? haven't been in this super long. does it always suffer along with stocks?

In my opinion the real estate market regime is totally different than what it was in 2006 where any schmuck can get a home. I don’t see how it will crash.

 

[fastlanedoll]

In my opinion the real estate market regime is totally different than what it was in 2006 where any schmuck can get a home. I don’t see how it will crash.

where in the world is a good place to place my next bet?

 

[socaldude]

where in the world is a good place to place my next bet?

You’re asking me which investment or trade is the best bang for your buck right now?

 

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[Andreas Thiel]

how far behind do you think the housing market will suffer? haven't been in this super long. does it always suffer along with stocks?

Just thinking about this based on differences between the last housing crash and now.

Back then the banks suffered because of bad debt in the housing market and insane leverage through the financial products. The banks needed to be bailed out.
Now the whole economy is in a bad place except for the banks. The banks would have to bail the economy out this time.

In general the housing market does not move as fast as other sectors. Sure, when there are margin calls, then expensive properties might get sold and due to declining wealth housing starts might decline which might put some pressure on prices. But in order for a significant part of the mortgages to go bad, many other things will have to happen before that.

 

[Andreas Thiel]

Somebody wrote that the recent upward momentum is due to people celebrating that Europe considers issuing war bonds (with representatives meeting in Versailles, which could be seen as ... questionable ... when you look at it from a historical angle).

Don't see much reason to celebrate that. That is also a step that Europeans were promised would never happen: EU countries then share liability for the debt of other coutries. Great incentives ... what could go wrong?

 

[fastlanedoll]

nah, i meant where in the world is a good place to invest in RE right now

 

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[ZF Lee]

Has anybody followed the nickel developments?
Just heard that the insane price increases happened due to margin calls and that this might trigger a chain event.
Some big players (I think a Chinese bank) seem to be involved badly enough to need a bailout.
Can't seem to find any articles that cover this, though.

I just started reading more into metals when I started going in on EV metals...there was whole different investing world.

Nickel spikes 60%: Here's why that matters and who will be hit

The metal added more than $10,000 to trade at a 15-year high above $40,000 a ton -- the biggest-ever daily dollar gain in the 35-year history of the contract

www.business-standard.com

It seems that nickel is vital for vehicle batteries...and while Russia only gives like 6% contribution to global supply, not all nickel is worth it. Russia supplies 17% of the world's Class 1 nickel which is exclusive for the EV batteries.

Nickel supply was also already tight by then. Indonesia, another major nickel producer, has also been banning the exports. They wanna shift to value-added side...like making the actual batteries themselves?

Indonesia plans to ‘hit the brakes’ on raw commodity exports

Indonesia has banned a number of unprocessed ore exports including nickel, tin and copper in a bid to encourage downstream industries.

www.mining.com

Spreading to other metals is already happening. There's also aluminium. Not sure why the Chinese went all out to curb emissions from the smelters...but they did it, and that cut supply:

Aluminum, nickel lead metals rally as market seeks clarity on SWIFT rules for Russia

Aluminum and nickel continued to lead the metals price rally March 1 after monthly average gains of around 7% in February as market players sought clarity on how some Russian banks exclusion from the

www.spglobal.com

And mind that many times silicon is added to aluminium to reinforce it (used for automotive). So that is another metal that is gonna get sticky.

 

[Andreas Thiel]

Coal is also seeing margin calls now. Could get ugly.

---

Since this is the "Chat About The Latest Market Action" thread, another random thing that some people might want to consider:

Amazon is seeing a boost right now. I'd be careful there. Cash flow wasn't great. The last earnings call was exceptional mostly because of the book value of their Rivian stake at the end of the reporting period. The next earnings call should be exceptional in the opposite direction. Doesn't seem priced in the way it should be.

 

[MoneyDoc]

Coal is also seeing margin calls now. Could get ugly.

---

Since this is the "Chat About The Latest Market Action" thread, another random thing that some people might want to consider:

Amazon is seeing a boost right now. I'd be careful there. Cash flow wasn't great. The last earnings call was exceptional mostly because of the book value of their Rivian stake at the end of the reporting period. The next earnings call should be exceptional in the opposite direction. Doesn't seem priced in the way it should be.

They are having a stock split...

 

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[Andreas Thiel]

They are having a stock split...

Just saying ... might not be a great time to get excited about that.

 

[MoneyDoc]

Just saying ... might not be a great time to get excited about that.

Oh no for sure. I was just referencing that in case you were wondering why it jumped yesterday.

 

[Bbenn30]

Any reasoning why you would expect a housing crash ... rather than an everything crash?
When I play the thought of how things could play out, housing is one of the later markets that would suffer.

---

Has anybody followed the nickel developments?
Just heard that the insane price increases happened due to margin calls and that this might trigger a chain event.
Some big players (I think a Chinese bank) seem to be involved badly enough to need a bailout.
Can't seem to find any articles that cover this, though.

I got to do some traveling last year, colorado, Wyoming, Utah, Nevada, Montana and Florida. It was the same story everywhere. Housing prices were inflated all to hell. It could be a new migration of people from city centers to rural areas. But a lot of folks are financing properties in my area that are overvalued by at least double. It seems after covid and through the tail end financial institutions and realtors are scraping every dollar they can from homes that aren't that valuable. I see people I know who can barely scrape 2 pennies together financing homes 300k or more. And it seems this is happening where.

 

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[ZF Lee]

RIP Hang Seng index

Hang Seng Index slumps below 20,000 as tech stocks routed

HONG KONG: Hong Kong stocks plunged today as technology firms were hit by news that the country's tech hub Shenzhen was put into lockdown, compounding...

www.thesundaily.my

2016 lows gonna get breached. Shenzhen, the tech capital of HK of China got locked down as well as a couple of other cities. The China techs like BABA also looking to lay off staff heavily. HSI put warrants were printing like crazy.

Generally though, Hang Seng has been in a really, really long downtrend. So the puts would have printed anyways?
Started some put warrants on HSI today for an overnight trade as the volume and queues is still good (and HSI still reeling back). But the futures are trading till 3am at my place...so we might get some small reprieve.

 

[socaldude]

I think the FED will be accommodative and not raise rates at a big magnitude. And that’s what matters. It doesn’t matter how many hikes or what the balance sheet reduction will be IMO.

Well sure enough. Interestingly both banks and tech cheered the paltry 0.25% rate increase.

 

[MJ DeMarco]

Well sure enough. Interestingly both banks and tech cheered the paltry 0.25% rate increase.

That'll stop inflation! Now instead of paying $6.39 for my favorite loaf of bread, I can get it for $6.34!

 

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[biophase]

I see people I know who can barely scrape 2 pennies together financing homes 300k or more. And it seems this is happening where.

How are they qualifying for the loan?

 

[NeoDialectic]

How are they qualifying for the loan?

.....right.... All the current stats show that people are more qualified for their mortgages than ever before.

So it sounds like the poster may have just been shooting from the hip based on feelings, unless the stats haven't caught up to some new movement on the ground or there is some kind of F*ckery in the measurement of peoples credit worthiness....

 

[MJ DeMarco]

Crude oil up 6% ...

 

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[Guest-5ty5s4]

.....right.... All the current stats show that people are more qualified for their mortgages than ever before.

So it sounds like the poster may have just been shooting from the hip based on feelings, unless the stats haven't caught up to some new movement on the ground or there is some kind of f*ckery in the measurement of peoples credit worthiness....

yeah, lending guidelines are a lot more strict nowadays than back in 2008, from what I've read (I was a pipsqueak back in '08! Lol!)

 

[socaldude]

Crude oil up 6% ...

Didn’t the “experts” say there was a lack of “spare capacity”. That’s the same people that say there is no inflation. Refining capacity is another story. I think distilled products prices will move higher.