Hi Traders.
I can like a company all day long. It doesn't matter.
I can like their story, their products, the CEO, the chart. If nobody else is putting money into it, it's not going to move, and I'm sitting there with dead money.
That's the most valuable lesson I learned when I left the floor.
On the floor you could hear the action. You saw it in your own pit or across the trading floor. The yelling was the clue something was going on.
Now I'm in Colorado, 2,000 miles from where I learned to trade in New York, and the floor is all but gone. But the same activity is louder than ever. The way we hear it has changed. It's been democratized, and if you know how and where to look, it's more telling than anything we ever had on the floor.
What I Do, Week In and Week Out
Every day I sit down, I don't start with headlines. I start with what moved.
I sort every sector by how far it moved against its own normal range. The winners at the top and the losers at the bottom are telling the story of the day, the week, the month, and the year. Right now that story is simple and ugly. Bonds are in charge. Semiconductors are the only thing that haven been able to rally through rising rates. Everything else is red or very red.
That's step one. Price action tells me the theme. I read the news after, to see if the news agrees.
Price moving is one kind of evidence that somebody's buying. Those are the flows of market positioning. Then there's a leveraged kind of fingerprint. When a big fund decides to make a long-term leveraged bet, it does so with a particular signature. That position can sneak into the market without leaving a huge mark, unless you know how to spot it.
This is where Andrew comes in.
Andrew tracks that flow every day, and I've been using his list the same way all year. Once I know the theme, I go find the names inside that theme where somebody has already committed real size a year out.
If a name I like is on there, I've got my trade. If it's not, I’ll wait.
And if a name I never thought about is on there inside my theme, that's the one I go study, because somebody else has done their homework and is putting money to work.
Same thing when a sector pops on a headline. Before I chase it, I go look at whether anybody is putting on size in those names a year out. If the calls are there, that pop is the beginning of something and I want in on the pullback. If it's quiet, I let it go.
Same question as always. Is anyone else buying?
Tomorrow at 1 PM ET, Andrew walks through how he reads that flow, and names where he's seeing it right now.
I'd watch it before Monday.
Enjoy the Journey,
Tim