Exactly right...bitches. Had I found the discipline to avoid them bitches for the last many many years I woulda added about 100bp per year to my lifetime record. I hate'm ...but I always come back. Bastardo's
What a crappy day. I certainly had no inkling Corn was going to make it's high on the opening. Grains remain the same. (L 10 SN, S 10 sm 750c, L 10 CN, S 10 CN 4.00c, L 15 CN 4.10 calls) Cotton is rallying. I'm trying to catch a falling knife. It either works or doesn't. It's going to cost me a couple of grand if not. I've already assumed it'll be a loser. Bonds, I'm flat but only after losing $500 on a 2 lot add at 111.21. Paid 27 and 29 for 6. EuroFx, came in short 5. Got 1 left after paying 136.29 for 2, selling 2 at 39 and then paying 29 for 4.
Since you open your global position on bonds in this journal and now you are flat, which is their net P&L?
My bond p&s including the 20 shorts I started with is up 11-12k. Those profits though were mostly in place before the journal started. Earlier in the year I was up or down 10-20k a day in bonds. The ride from 114 down to 108 put me back in the game. The trip from 108 back to 112 has been at times painful. I was short NQ on February 27th. It didn't make up for my bond shorts that day. I was short 10 ZB and 20 calls on one of those Bernanke testimony days, that also cost over 25k. I have no interest in Bonds as a ST trading vehicle. In fact I've no interest in ST trading. I've trained and partnered with one of the best electronic scalpers around. He trades DAX and smokes. He's simply awesome. I can't compete in those time frames. I've only been back in Bonds because I thought they were breaking out to the downside. In that persuit I'll be back. Soon. I'm lucky to have held on to most of my Dec-Jan ZB winnings. Uncanilly I cut back twice before the shit hit the fan on the upside. Luck. Randomness. By the grace of God type stuff. Nothing more to brag about than hitting the card you need on the river. The skill's the bet not the play. Now the $200 I had on Street Scene I will brag about.....
Pabst, during these months you had an idea of your MAE and MFE - let's say - so these extremes where the mkt could be cheap or expensive for a few seconds could be a cash-in opportunity to re-enter at higher prices (in a bearish scenario like you are following). Since you began this journal, 2 NFP economic reports offered you the opportunity to cash instantaneous 'windfall profits' of at least 10K for 10 lots last April and last Friday. - Don't you ever plan to scale-out part of your position in these scenarios? - Bernard
I had a horrible day in Corn which I intended to get out of today (before I knew it was going to open up 12 freakin' lower) but I'll talk about Bonds first. I'm obviously thrilled I covered those shorts. Bernard, my trading in Bonds is built upon 2 premises. One is that 114 will never trade again. Two is that Bonds after a 23 year bull cycle are going to succumb to the pressures of commodity inflation, budget deficits, a weak dollar and competing debt issuance from emerging entities. I'm not an America is Rome type moonbat (most the world sux, not just us) so I don't oversubscribe to any single bear theory. IMO though there's just enough doubt about the wisdom of tying up depreciating dollars at under 5% for three decades that one is not goofy anticipating the possibility of a concession in price. Hence the market is 4 years off it's high and has stopped dead in it's tracks at 4.50%. Unfortunately for bears the market has also refused to penetrate 5% after several tries. I'm well aware there's also a compelling bullish case for Bonds. While the media fixates on the sub-prime mess, a much more serious situation looms in the pension liability crisis caused by prolonged low long bond yields. Most funds are mandated to hold relatively little assets in equities or alternative investments. An institutional retirement account is a glorified bond fund. When these teachers associations and the like were drawing up charters a couple of decades back they assumed average yields of 6-8%. Those anticipated returns seemed modest given that the long bond spent a decade above 8%. Well now they're hosed. Also it's impossible to not think about stocks finding a top. What would a break in stocks do to high yield corporates? Those hedgies playing the carry game are short Treasuries against that 9% stuff. Watching them unwind may be unmerciful for a Treasury short. All that aside, I find little wisdom in covering positions that I believe at the time have further to go. Being opinionated doesn't hurt traders. Being WRONG hurts traders. The bane though is it's very hard to take profits when your overly biased and very hard to take losses when you're too biased. We all know that. If someone buy's a stock for $7 thinking it's going to a hundred he's not the guy to ask "why didn't you sell off that high at $9.23"? I once heard a pundit say that for every secretary at MSFT who held her IPO stock to 3mil there were 10 other holders who got out as soon as those MSFT shares equaled a new car or a down payment on a modest home. We also know of dot com owners who went from 3 mil to zero. As traders and believers in randomness there's truly no absolutes. I guess what I'm saying Bernard is I'm trying to roll the dice and take 10pts out of 40 bonds rather than predict the next turn. And being opinionated makes buying breaks all the more difficult. My worst trades, my blow out trades-have come by fading a move after taking a pre-mature profit made on the right side of the move. I guarantee you this:70% of the index perma bears on ET who haven't yet blown out will eventually do so by buying the market after the high is in.
More random Bond thoughts. Maybe the break starts in June. I'm all about fractals and measured moves. My hypothesis has been surging commodities and a falling dollar pressure rates while stocks put rates on ignore and asset inflate with everything else. Then a few months down the road stocks say "hey what's going on here, we gotta break, the Bond just crossed 7%"! It all may soon happen. I've had most of it right but TOTALLY FUCKED IT UP! My BP call ratio that I didn't do: GOLDEN Buying most any other commodity in the world the past 2 months other than Sugar, Cotton or Grains: GOLDEN Buying index futures which I'm phobic toward: GOLDEN Shorting Bonds: uneventful. For now......
I think bonds as well as currencies have been abandoned by the private sector. G10 CB's have simply overwhelmed any ability to move the markets out of there current ranges. Sorry to keep repeating it. I just had to vent. The market doesn't need to sweat the fed, because there not in charge.
Good post. Nice to see a coherent thought in light of the makloda/mymini/increasenow infection. I'm done with ET for a spell. Keep the journal going.