BY ANDREW GIOVINAZZI
November 9, 2023
Yo Pit Crazies,
In what will be the meme of all memes, Fed Chair Jerome Powell says, “Shut the Fuc&^% Door.”
There is nothing like a terrible bond auction to remind traders that rates are not going down.
Everytine JPow gets up there and speaks, he talks tough and he has held the line, but the knuckleheads that run Congress and the Executive Branch still don’t get it.
When most of the GDP growth is from USGOV deficit spending, that is a problem.
The bond market is now in control of rates. The chart below is telling a story.
This is the iShares Barclays 20+ year US GOVT bond ETF (Ticker: TLT) chart and today was an ugly selloff after a very poor auction.
My big question is how much politics slips into the stock market at this point.
It can happen, Recall after the 2016 election the Invesco QQQ Trust (Ticker: QQQ) trust dipped into the 120’s only to rip to 400 by mid 2021.
Not a bad return in 5 years. Even now it is $370. Politics in the short term can matter.
SPX Nov10 skew curve with EH curve (beta)
In the short short term I look at how VIX prices the bond auction.
There are some disturbing trends.
The VIX CURVE lifted across the board today
That is the rub. If VIX keeps climbing, the poor bond auction will have some legs and we are in for a new bout of volatility. However if the selloff Thursday does not hold or extend, VIX will crash. Lately, the morning sessions have been take it down and rally it into the close.
Get the sellers out early, then launch mode. What stock traders need to understand is the bond market is driving the ship now.
The potential for more choppy two way trading is big. For those that want to learn how to do that, the Trading Desk is the place.
Mark and I just closed our Vol Shares 2x VIX futures ETF (Ticker: UVIX) trade from 1 month ago. Yes, 1 month ago.
If UVIX is not going up, it is going down. 20 points from top if I recollect. We do hedge. Our last UVIX trade, we sold the bottom only for the product to act like normal and generate a small profit.
We added another UVIX put with a strong Mini SPX index (Ticker: XSP) hedge.
That hedge is likely to pay today.
Setting up a trade where I am wrong and lose nothing, but right and can win big, is something our students can learn in the Trading Desk. Call Customer Care at 1-888-872-3301 for details!
Trade with traders who trade their own money.
To Your Trading Success,
AG
Andrew Giovinazzi
30-Year Trading Pro
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