’17 Thought of the Day

Risk Taking

| 50Pips
“In ‘Confessions of a Winning Poker Player’, Jack King said, ‘Few players recall big pots they have won, strange as it seems, but every player can remember with remarkable accuracy the outstanding tough beats of his career.’ It seems true to me, cause walking in here, I can hardly remember how I built my bankroll, but I can’t stop thinking about the way I lost it.” Mike McDermott (Rounders)
As we head into the end of the week and what we hope will be an interesting trading day, the only questions that really matters is: “Are they going to buy up risk into the weekend?”. We have outlined all the key issues/themes/charts that are in play, so just scroll back on recent posts/charts for an overview.
As we wait to see how NY flows are going to take this, we suggest making some time to listen to what Aaron Brown has to say about risk. As a general rule, we would always make time for Aaron:

150: A lesson in risk taking—with the former risk manager of a $200B fund, Aaron Brown, Pt. 2

As a bonus, here is his MIT lecture on Poker Economics:
Wishing everyone a great weekend. We’ll be back on Sunday with our weekly outlook video.

Riddle Me This

| 50Pips
“Why should I apologize for the monster I’ve become? No one ever apologized for making me this way.” – The Joker
Yes, it’s a Batman kind of day…Today’s thought of the day make us think of the markets because indeed, the markets are really extended and are moving in a very unnatural way compared to historic norms. We all know the dislocations that the Central Banks have created but sooner or later something will have to give.
Riddle me this: how long can high yield continue to puke as equities continue to make new highs? As we have said before, you can run but you can’t hide, sooner or later the unwind will come… don’t forget to keep an eye on internals, breadth doesn’t lie.
To be clear, we are not looking for an ‘end of the world scenario’. Any decent correction in equities will likely be an interesting buying opportunity. All we are looking for is to see some healthy two-sided action back in the markets. We are looking for some volatility to come back into the picture to shake out complacent players and open up more opportunities.
It’s good to see that the FinTwit crowd has started to pick up on our discussion on breadth and sector divergence. Naturally, this doesn’t mean anything in terms of coming moves but it is good to see more participants noticing that this market is not ‘crack.free’.
 We will continue to post updated charts on Twitter.
As always, there is no substitute for real-time/live action; if you are interested in attending a daily morning call into NY with a more detailed live discussion on all the charts and ideas we highlight/review in the outlook video and here on the blog, you should check out our Daily Webinar Group.

Desperately Seeking Follow-Through

| 50Pips
“I have seen many storms in my life. Most storms have caught me by surprise, so I had to learn very quickly to look further and understand that I am not capable of controlling the weather, to exercise the art of patience and to respect the fury of nature.” – Paulo Coelho
No big change to what we have been discussing to our Latest Outlook Video and blog posts but it does look like markets may be trying to make a sustained move. Once again, we have to stress that for some real follow-through, we need to see YEN and GOLD co-operate and all charts moving in sync with each other.
Apart from the usual suspects, here a 3 key charts we would be keeping an eye out on today:
As always there is no substitute for real-time/live action; if you are interested in attending a daily morning call into NY with a more detailed live discussion on all the charts and ideas we highlight/review in the outlook video and here on the blog, you should check out our Daily Webinar Group.

Groundhog Day Continues

| 50Pips
“That men do not learn very much  from the lessons of history is the  most important of all the lessons  that history has to teach.” – Aldous Huxley
Not that much to add to our Latest Outlook Video. Tension keep on building on the geopolitical stage but equities just don’t care. As humble students of the markets know, this pain trade can continue far longer than most participants can stay solvent and records are made to be broken. However, you can run but you can’t hide, sooner or later the unwind will come… don’t forget to keep an eye on internals, breadth doesn’t lie.
The most interesting development seems to be that we have seen positioning and squaring coming in on fixed income and more importantly, on commodities. As we have discussed in the past, if you are looking for ‘tells’ intraday, keep an eye on USDJPY and GOLD. You need to be watching those ‘like a hawk’.
Again, don’t forget that most of the event risk this week is in the o/n sessions, outside of RTH. Trade and manage risk accordingly…
As always there is no substitute for real-time/live action; if you are interested in attending a daily morning call into NY with a more detailed live discussion on all the charts and ideas we highlight/review in the outlook video and here on the blog, you should check out our Daily Webinar Group.

Chart Book

| 50Pips
“To only praise your success and fail to learn from your mistakes , separates the educated amateur from the professional.” – Bruce Lee
Here is a short selection of some of the charts that we will be going through today…
Look at the last 6 days in DXY; indeed, much to do about nothing. The jury is still out:
The sideways chop and market looking for direction is even clearer if you look at EURUSD on both the Daily and Week and see how it is hovering around a key pivotal level:
Focus is going to be on Apple at the open. It held the 156.50s and has broken to new highs. As long as we can’t get back below the 165 mark it is hard to see how the market is going to really roll-over:
Eyes on Crude. Still stuck around the key 55 pivotal level and what looked like a decent chance for a reversal is currently having trouble thanks to the continuing Venezuela drama:
Facebook needs to hold above the 175.50s or things could get a bit ugly:
RUT still doing the best job at resisting the endless ramps:
As always there is no substitute for real-time/live action; if you are interested in attending a daily morning call into NY with a more detailed live discussion on all the charts and ideas we highlight/review in the outlook video and here on the blog, you should check out our Daily Webinar Group.

Crack and Fade

| 50Pips
“Experience is what you got when you didn’t get what you wanted.” – Howard Marks
As we have been discussing, these low volume equity ramps on far from impressive breadth are far from what you would expect to see in a strong/healthy market phase. Furthermore, apart from the weakness we have been discussing and reviewing in sectors like Transports, Retail, Health Care, Real Estate, don’t forget to note that apart from the usual suspect in the FANG+ club, we have seen a lot of far from impressive earnings and revised guidance releases. Also, once again and not to sound like a broken record, keep an eye on high yield and metals…
Today’s action should be extremely interesting as we will finally see the market reaction to both the appointment of the new Fed Chair and the Tax Plan. Needless to say, it is hard to see what could come out that would suddenly want to spark a buying frenzy (would take a miracle out of Washington) but as we have said before, these are far from ‘normal’ markets. Bottom line, we still feel this market is due for a healthy correction and even if most have lost hope, there is a good chance that yesterday’s action was a sign that we are ready to see some downside.
A good way to get an intraday feel for possible acceleration is to keep an eye on USDJPY. No matter what metals or equities are doing, unless yen can get some momo, then the move will likely not manage to stick.
Don’t forget to keep an eye on crude; extremely interesting failure at the 55 mark as we enter weak seasonal months.
Last but not least, we will be keeping a close eye on how individual names open post yesterday’s earning releases as we wait for Apple to report today. No change to our Tesla outlook, since the double failure at the 380s. We have nothing against Elon but since we continue to refuse to believe that he can walk on water, we are looking for a healthy dose of reality and a move back below the 300s into the 280s (and this is purely a conservative technical target).
In case you missed it, here is our Latest Outlook Video.
As always there is no substitute for real-time/live action; if you are interested in attending a daily morning call into NY with a more detailed live discussion on all the charts and ideas we highlight/review in the outlook video and here on the blog, you should check out our Daily Webinar Group.

TAX TAX TAX

| 50Pips
“My job is not to predict, my job is to have the  right framework and diligence to be able to react, and react effectively in the marketplace.  Especially  managing  short  exposure.  You  come  in  every  day  ready  to  respond  to  what  unfolds in the marketplace, and that may be risk control or that may be increasing your  exposure, pressing your exposure.  – Doug Noland
In case you missed it, here is our Latest Outlook Video for the week ahead.
As always there is no substitute for real-time/live action; if you are interested in attending a daily morning call into NY with a more detailed live discussion on all the charts and ideas we highlight/review in the outlook video and here on the blog, you should check out our Daily Webinar Group.

More Cracks

| 50Pips
“If you are a successful game player, it can be a fascinating, consuming, totally absorbing experience; in fact it has to be. If it is not totally absorbing, you are not likely to be among the most successful because you are competing with those who do find it so absorbing.” – George Goodman (aka Adam Smith), “The Money Game”
As we have been discussing on the Twitter Feed with a lot of accompanying charts, this is far from a strong/healthy phase of this rally. Naturally price can continue to go parabolic but essentially, just a handful of stocks (the broader FANGs) are holding the market up.
Breadth is far from impressive and we have negative monthly closes shaping up in various sectors: Transports, Retail, Health Care, Real Estate. Furthermore, apart from the fact that SPX and DJI have been far from being as perky as NDX, the RUT has really not been impressed with this recent FANG+ ramp.

We still have to get through a lot of headline risk this week with CBs and US data dump on Friday but don’t forget we also have more more earnings, along with Apple… should be very interesting. We’ll just have to be patient and see what shapes up…
In case you missed it, here is our Latest Outlook Video for the week ahead.
As always there is no substitute for real-time/live action; if you are interested in attending a daily morning call into NY with a more detailed live discussion on all the charts and ideas we highlight/review in the outlook video and here on the blog, you should check out our Daily Webinar Group.

Morning Update

| 50Pips
“If you always put limit on everything you do, physical or anything else. It will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them.” – Bruce Lee
Note for active 50Scouts members: make sure you keep an eye on your inbox for a free pass to today’s daily webinar session (make sure to check your spam folder too).
As always there is no substitute for real-time/live action; if you are interested in attending a daily morning call into NY with a more detailed live discussion on all the charts and ideas we highlight/review in the outlook video and here on the blog, you should check out our Daily Webinar Group.