Hey guys, I have been messaged by many of you who are loving the more frequent trade/market updates, but more importantly, the new upgrades in the daily systematic models reports. I am going to continue improving everything and reinvesting back into the Substack to improve the quality for you ALL.
Now I have been so focused on US equities and bonds, and it seems to be the case that European equities have actually taken a back seat. I am always tracking how things are moving in Europe and the flows there, but sometimes my attention needs to be focused on the hottest market, and in my view over the last month that’s been the US.
There’s been a TONNE of themes across the last 9 months, but it’s pretty clear right now that inflation (including crude prices) are in the driving seat. I see a lot of market talk about how hard things are to read right now, given the frequent shifts. But in my view, when the market is so tied to one theme, it becomes much easier to print from it. The issue traders tend to have, is that when a market is flipping from theme to theme in short periods of time and getting thrown around by new information from different catalysts, it can be HARD. but when the theme itself sits in fornt of you (inflation), you can begin to think MUCH more clearly and actually lay out probabilistic outcomes.
I always want to be in a place where I’m executing trades at an extreme because that means even if I have little informational edge, there is a higher probability that I can at least get onside and break even because I’m executing at an extreme. Now for anyone who hasn’t followed the macro reports across this year, I recommend you reading them all back because they are going to be key if you’re looking to reverse engineer a framework. But what you will see is that from the trades shared this year, the majority have been at an extreme where I was able to at least roll my stops to breakeven.
For example, you may have little information edge on EUR/USD, but if it is trading at an extreme (either in price, or it’s main catalyst like rate differentials), then you don’t need every single factor aligning to execute (of course that would be good, but don’t over complcate things too much).