Market Report/Chat Comments (July 9, 2020): "Double Bottom" Completes; PAM Community Loads Up On NQ And ES Longs For The Seasonal Liquidity Flows Peak

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robert.p.balanModeratorLeaderOwnerJul 9, 2020 6:54 AM

GOOD MORNING EUROPE

July 9, 2020

robert.p.balanModeratorLeaderOwnerJul 9, 2020 7:08 AM

The bond market looks like it is hewing more to the outlook favoring Ippy's 2015 model -- which suggests rising yields today and tomorrow.

That could trigger rising equities as well during the two day period. This is not a definite development yet, but we need to take defensive action in case it happens.

robert.p.balanModeratorLeaderOwnerJul 9, 2020 7:14 AM

Here is the PAM situation -- the RTYU= positions are in the green. It is the YMU0 shorts that are slightly underwater. We will focus on protecting the YMU0 short positions.

The models work off NY close prices, so even if Ippy's model is indeed at work, we could still see very short term downside moves in yields today, which should translate into lower equity futures.

RTYM0 -- DONE AT 1399.10 SOLD ANOTHER 96 CONTRACTS OF RTYU0 FOR ALL FUNDS.

robert.p.balanModeratorLeaderOwnerJul 9, 2020 7:22 AM

Another thing we can do is lighten up positions that are in the green, and reinstate those if we do get a ratchet up higher in equities over the next two days. Just to make sure we also get to ride on any short downswing (in case Ippy's model is not it), we can put sell order just below the recent 1417.5 low point yesterday.

robert.p.balanModeratorLeaderOwnerJul 9, 2020 7:28 AM

We can offload some short RTYU0s at modest profits at this point. This is desirable as we do not want to hedge up a lot.

robert.p.balanModeratorLeaderOwnerJul 9, 2020 7:34 AM

We can reinstate those short positions easily, if yields do fall instead of rising as being suggested by price action vs model. We do have a lot of short RTYU0

robert.p.balanModeratorLeaderOwnerJul 9, 2020 7:39 AM

all PAM SELLS 192 CONTRACTS RTYU0 TO LIGHTEN UP, ALL FUNDS. AT XXX DISCRETION (TAKE UP TRADE IN THE JOINT ACCT).

RTYU0 -- DONE AT 1418.2 BOOUGHT BACK 196 CONTRACTS TO LIGHTEN UP. FOR ALL FUNDS.

robert.p.balanModeratorLeaderOwnerJul 9, 2020 7:54 AM

That's a quick $173,040 in the till.

bryanlanJul 9, 2020 7:59 AM

Pretty sure Robert could squeeze some profit from a rock if it put his mind to it..wait, he does that regularly with gold..

robert.p.balanModeratorLeaderOwnerJul 9, 2020 8:02 AM

Thanks bryan

Now we put in the prospective hedges.

all PAM BUYS 480 CONTRACTS OF NQU0 AT BREACH OF 10,700 AS LONG HEDGE FOR THE SHORT RTYU0 AND YMU0 SHORT POSITIONS. GTC.

If the market does fall, we reinstate the short RTYU0 positions.

all PAM SELLS 192 CONTRACTS OF RTYU0 AT BREACH OF 1410, FOR ALL FUNDS. GTC.

There is only 8 points of slippage between take-profit and re-sell in RTYU0, which is a lot less than the $173K quick loot. Worthwhile doing this exercise, as now that is $173K that will not go away.

robert.p.balanModeratorLeaderOwnerJul 9, 2020 8:25 AM

all PAM BUYS BACK 48 CONTRACTS YMU0 TO LIGHTEN UP, FOR ALL FUNDS. XXX DISCRETION-

YMU0 - DONE AT 25,886 BOUGHT BACK 48 CONTRACTS YMU0 FOR ALL FUNDS, TO LIGHTEN UP.

all PAM SELLS ANOTHER 96 CONTRACTS OF RTYU0, XXX DISCRETION.

robert.p.balanModeratorLeaderOwnerJul 9, 2020 8:33 AM

RTYU0 -- DONE AT 1414.5 BOUGHT BACK 96 CONTRACTS RTYU0 FOR ALL FUNDS.

PAM SELLS 192 CONTRACTS OF RTYU0 AT BREACH OF 1410, FOR ALL FUNDS. GTC.

MODIFY THIS TO:

all PAM SELLS 288 (FROM 192) CONTRACTS OF RTYU0 AT BREACH OF 1410, FOR ALL FUNDS. GTC.

robert.p.balanModeratorLeaderOwnerJul 9, 2020 8:51 AM

PAM BUYS 480 CONTRACTS OF NQU0 AT BREACH OF 10,700 AS LONG HEDGE FOR THE SHORT RTYU0 AND YMU0 SHORT POSITIONS. GTC.

MODIFY THIS TO:

all PAM BUYS 528 (FROM 480) CONTRACTS OF NQU0 AT BREACH OF 10,690 (FROM 10,700) AS LONG HEDGE FOR THE SHORT RTYU0 AND YMU0 SHORT POSITIONS. GTC.

robert.p.balanModeratorLeaderOwnerJul 9, 2020 8:56 AM

NOW, WE ARE READY FOR A RALLY IN EQUITIES (IF IT HAPPENS) VIA THE LONG HEDGES . WE HAVE SECURED NEW $280K OF MARGIN CAPITAL.

benrimJul 9, 2020 9:04 AM

I'm confused yesterday you went short rty at 1399, is that position still open ? or did you close it ?

robert.p.balanModeratorLeaderOwnerJul 9, 2020 9:14 AM

Ben -- do not be confused. Read my posts and parse them well. We are short -- that 1399.1 RTYU0 short is already there in the spreadsheet. But that short position will not dictate strategy going forward. If the market rises, we will be hedged/overhedged. We are securing profits where we can, and reset the short positions if the market keeps falling. Study these posts today very well -- it is what PAM's 4-D Method of trading is all about.

OK Ben, you just joined us two days ago. Kindly read this:

The Burden Of The Bullish-Bearish Meme: Unleash The Total Power Of Compounding And Large Numbers Laws, Instead

Also read all the articles at the Getting Started, while you are at it.

milonnewdayJul 9, 2020 9:20 AM

Robert Do you think the current bull market in China is similar with the situation in late 2014?

In late 2014, the US stock market was in the late cycle, and China stock always react as the crazy bull when to chase others market. And then all over

robert.p.balanModeratorLeaderOwnerJul 9, 2020 9:26 AM

MND -- sugar high .. its the CCP just jawboning investors. It is a case of domestic investors passing the hot potato around -- the Gwielo stock investors are having a massive stock market exposure flight from Chinese equities -- nobody would want to be in a market where the domestic currency is being systematically weakened.

vjapnJul 9, 2020 9:31 AM

Robert, If Ippy’s 2015 model is in play, and equities rise for 2 days, would you still be looking for a sharp selloff (double bottom) thereafter?

robert.p.balanModeratorLeaderOwnerJul 9, 2020 9:40 AM

We should be getting the move towards a double bottom today -- if that does not happen, we have a two-to-three day rally in yields (and equities as well), and then we are due for another downove. But the rest of July and August period is going to be really bad for equities. good for bonds.

1 replyJuly 9, 2020 10:08 AM

milonnewdayJul 9, 2020 9:40 AM

I agree the official media is advertising the domestic equity market. When I look the HK-SHANGHAI&SHENZHEN fund flow, it shows me that the money is keeping inflow to the Chinese stock market. And, the weak US dollar is relatively supporting RMB?

robert.p.balanModeratorLeaderOwnerJul 9, 2020 9:42 AM

The RMB/CNY is weakening aginst the US Dollar. The USD is not weak relative to the CNY

milonnewdayJul 9, 2020 9:45 AM

Yes, I mean the expected weak dollar in the rest of this year is supporting the CNY?

Scott007Jul 9, 2020 9:45 AM

Given the analysis and action if we are heavy short here follow suit with evening up the long or go over long. By the bigger trend is still to the shorts as I read the chart above, correct? I'm still etf until end of week.

robert.p.balanModeratorLeaderOwnerJul 9, 2020 9:47 AM

Is This The Real Reason For China's Massive Market Meltup?

MND -- the Chinese govt is weakening the CNY as riposte to the US raft of sanctions being prepared by the Trump govt. As long as Trump keeps those sanction alive, the CNY will weaken.

Scott007 -- correct. That is why we call the long trades "hedges". Actually we intend a massive overhedge.

We should be getting the move towards a double bottom today -- if that does not happen, we have a two-to-three day rally in yields (and equities as well), and then we are due for another downove. But the rest of July and August period is going to be really bad for equities. good for bonds.

robert.p.balanModeratorLeaderOwnerJul 9, 2020 10:22 AM

XXX tell me that Prime Brokers will accept the long hedges trades, if hit.

robert.p.balanModeratorLeaderOwnerJul 9, 2020 10:24 AM

The earnings rally will have its own short-lived impulse higher, but likely coming from lower levels relative to today-- I am generalizing the July-August period, which has been historically bad for risk assets.

This is why:

vjapnJul 9, 2020 10:37 AM

Robert, Your answer to CL was helpful. Thank you. Due to the close proximity or orders, it is very possible that the long NQ and short Russell are executed. If that indeed happens, are you planning a hedge to the hedge. I would like to understand your 4D mindset.

robert.p.balanModeratorLeaderOwnerJul 9, 2020 10:37 AM

WE NOW PUT A TRAILING PROFIT STOP FOR OUR LONG GCQ0 TRADES, 96 CONTRACTS BOUGHT AT 1787.1, JULY 6,

all PAM PUTS A TRAILING STOP AND SELL 96 CONTRACT OF GCU0 AT BREACH OF 1815, FOR ALL FUNDS. WE WILL REVISE THIS STOP AS THE MARKET PROGRESSES.

robert.p.balanModeratorLeaderOwnerJul 9, 2020 10:45 AM

vjapn -- that is unlikely to happen becasue once the NQ overhedge is hit, we will cancel the short RTY limit orders. We reset those at what we expect to be a top after a few days.

martin.k11Jul 9, 2020 11:26 AM

Good morning all. Robert - just wanted to say thank you, super clear trade logs with your brief rationale behind. super easy to follow. just love it

jdefpJul 9, 2020 11:55 AM

And there goes NQ.

robert.p.balanModeratorLeaderOwnerJul 9, 2020 11:59 AM

I don't have the averaged price from the XXX boys yet, but we will now cancel the RTYU0 short limit order.

all PAM CANCELS THE RTYU0 LIMIT ORDER TO SELL 288 (FROM 192) CONTRACTS OF RTYU0 AT BREACH OF 1410

You are welcome martin

robert.p.balanModeratorLeaderOwnerJul 9, 2020 12:07 PM

XXX put some weight behind the PAM longs after those were executed. Prime Broker execution, because they knew it in advance, was excellent, XXX says.

3 repliesJuly 9, 2020 12:39 PM

If XXX sparked this price action it will be good to know *before* they start selling!

robert.p.balanModeratorLeaderOwnerJul 9, 2020 12:12 PM

NQU0 - DONE AT 10,692.75 BOUGHT 528 NQU0 CONTRACTS AS OVERHEDGE FOR SHORT YMU0 AND RTYU0 POSITIONS. FOR ALL FUNDS..

XXX sells after PAM has sold They never front run us

robert.p.balanModeratorLeaderOwnerJul 9, 2020 1:20 PM

GCQ0 - DONE AT 1814.45 -- SOLD 96 CONTRACTS GCQ0 (BOUGHT AT 1787.1, JULY 6) FOR ALL FUNDS.

robert.p.balanModeratorLeaderOwnerJul 9, 2020 1:21 PM

all REINSTATE LONG GCQ0 -- BUY 96 CONTRACTS GCU0 AT 1813 LIMIT OR BETTER, FOR ALL FUNDS.

robert.p.balanModeratorLeaderOwnerJul 9, 2020 1:28 PM

REINSTATE LONG GCQ0 -- BUY 96 CONTRACTS GCU0 AT 1813 LIMIT OR BETTER, FOR ALL FUNDS.

MODIFY TO:

all REINSTATE LONG GCQ0 -- BUY 96 CONTRACTS GCU0 AT 1813 LIMIT OR BETTER,

OR AT UPSIDE BREACH OF 1822 (FROM 1820), OCO, GTC.

robert.p.balanModeratorLeaderOwnerJul 9, 2020 1:32 PM

robert.p.balanModeratorLeaderOwnerJul 9, 2020 1:34 PM

Picked up a nice bundle of loose change in the gold trade ($270K) , kick-starting the gold trade stat for July 2020.

We hope to get back into the gold uptrend -- one way or the other.

robert.p.balanModeratorLeaderOwnerJul 9, 2020 2:36 PM

GCU0 -- DONE AT BETTER 1812.60 BOUGHT 96 CONTRACTS GCU0 FOR ALL FUNDS.

robert.p.balanModeratorLeaderOwnerJul 9, 2020 2:44 PM

We're back in the long gold trade. Secured most of the potential profits -- now we milk the rest of the uptrend.

robert.p.balanModeratorLeaderOwnerJul 9, 2020 3:43 PM

Gold is back on track. Wohoo!

all PAM BUYS ANOTHER 48 CONTRACTS GCQ0 FOR ALL FUNDS. DCC DISCRETION.

GCQ0 -- DONE AT 1819.35 BOUGHT ANOTHER 48 CONTRACTS GCQ0, FOR ALL FUNDS.

robert.p.balanModeratorLeaderOwnerJul 9, 2020 4:12 PM

Now there too wide a gap between the NQ hedge and the YM underyling. Time to trim the hedges.

all PAM SELLS 144 NQU0 AT 10,745 LIMIT OR BETTER, FOR ALL FUNDS. GTC.

robert.p.balanModeratorLeaderOwnerJul 9, 2020 4:32 PM

all PAM BUYS BACK 144 YMU0 AT 25,720 LIMIT OR BETTER OR UPSIDE BREACH OF 25,800, OCO. FOR ALL FUNDS.

WE WILL RESET THESE SHORT TRADES AT HIGHER LEVELS. THE MARKET SHOULD BOUNCE FROM HERE.

robert.p.balanModeratorLeaderOwnerJul 9, 2020 4:51 PM

YMU0 -- DONE AT BETTER -- BOUGHT BACK 144 CONTRACTS YMU0 AT 25,718.10 FOR ALL FUNDS,

robert.p.balanModeratorLeaderOwnerJul 9, 2020 4:55 PM

all PAM BUYS BACK 144 CONTACTS YMU0 FOR ALL FUNDS. DCC DISCRETION.

YMU0 -- DONE AT 25,590 BOUGHT BACK 144 CONTRACTS YMU0 FOR ALL FUNDS.

robert.p.balanModeratorLeaderOwnerJul 9, 2020 5:02 PM

all PAM BUYS BACK 96 CONTRACTS RTYU0 FOR ALL FUNDS -- DCC DISCRETION

RTYU0 -- DONE AT 1386 BOUGHT BACK 96 CONTRACTS OF RTYU0 FOR ALL FUNDS.

THAT'S ALL THE DOUBLE BOTTOM, WE CAN PROBABLY HOPE FOR.

robert.p.balanModeratorLeaderOwnerJul 9, 2020 5:18 PM

robert.p.balanModeratorLeaderOwnerJul 9, 2020 5:21 PM

all PAM SELLS $360,00 WORTH OF TZA -- AT 23.75, FOR SWING AND ALGO.

2 repliesJuly 9, 2020 5:42 PM

robert.p.balanModeratorLeaderOwnerJul 9, 2020 5:32 PM

OK. Lets be clear -- when I say thats the double bottom, that is maybe the most we can expect on the downside, before the next uptrend picks up again.

Of course, that is a general statement, I am not saying we have seen the absolute, to-the-last-tick bottom. I am not that smart to know that.

Triple bottom in RTY and YM. not not really close in ES and NQ.

I said lets be nimble on the downside, and then to the upside. Market gave a chance to get out of the short positions. I took it otherwise I run the risk of running the shorts again until the peak of the liquidity cycle.

Hopefully, historical seasonality will still prevail. Took a judgement call several days ago, and bet that we will still have to see the seasonal peak after a few more days.

Not worried about the NQ long hedges. We will likely make money out of those too.

all PAM SELLS $360,00 WORTH OF TZA -- AT 23.75, FOR SWING AND ALGO.

robert.p.balanModeratorLeaderOwnerJul 9, 2020 6:02 PM

Gold has become positively correlated with equities again. If you believe that giold and equities are positively correlated, then logn gold and long NQ can go together. That is how we are positioned in gold. I cannot say whether or not we have seen the gold low. But we keep gold longs based on that expected rally in equities continuing for a few more days.

The liquidity seasonal peaks vs NDX

3 repliesJuly 9, 2020 6:58 PM

flytightJul 9, 2020 6:51 PM

robert.p.balan Very nicely done Robert, particularly the call for a second bottom and your trades in support of that call.

Where do we get the current SOMA transactions to see if they are in line with the 5y average that should peak in the next few weeks?

robert.p.balanModeratorLeaderOwnerJul 9, 2020 6:55 PM

flytight Seasonal shorts hardly made much in terms of percent profit, but luckily we were in large so even with a small bite, we had a wide mouth -- profits still added up to a very decent bundle.

We made a quick $714,068.40 on those short-lived seasonal short positions; very satisfactory considering they have been underwater for most of the week.

vjapnJul 9, 2020 7:05 PM

Robert, yields now accelerating lower. Does this perhaps suggest one more lower low in equities?

V -- that has just been discussed in Nexus -- check if you have access to Nexus.

vjapnJul 9, 2020 7:07 PM

Robert, I know that the cycles are not always in sync. However, I thought the momentum seemed ominous

RM13Jul 9, 2020 7:12 PM

Robert, would there be a trend for Chinese equities to sell off during next US market sell off?

robert.p.balanModeratorLeaderOwnerJul 9, 2020 7:13 PM

No idea RMK. I stopped trading Chinese equities ten years ago.

vjapn -- this is one of the periods in a year when equities can go higher while yields go lower.

robert.p.balanModeratorLeaderOwnerJul 9, 2020 9:14 PM

NQU0 - DONE AT 10745.76 - SOLD 144 CONTRACTS NQU0 TO TRIM THE OVERHEDGE WITH MOST SHORT POSITIONING GONE, FOR ALL FUNDS.

1 replyJuly 9, 2020 9:22 PM

god599Jul 9, 2020 9:22 PM

Robert, still have 384 long unhedged NQU0 contracts correct?

robert.p.balanModeratorLeaderOwnerJul 9, 2020 9:22 PM

CORRECT 559

QuaziJul 9, 2020 9:25 PM

And you are long 144 Gold contracts and holding un-hedged overnight, correct?

robert.p.balanModeratorLeaderOwnerJul 9, 2020 9:26 PM

Yes Mr. Q

QuaziJul 9, 2020 9:29 PM

Thank you RPB ... can you please clarify your "sell" gold long followed by "buy" gold long transactions this morning for about the same price?

robert.p.balanModeratorLeaderOwnerJul 9, 2020 9:32 PM

It was a trailing (sell) stop, designed to keep most profits in case there was a sharp decline, as gold sometimes tends to do. But I saw that the Gold sell-off was responding to the sell off in equities, But I was/am still convinced that equities are going higher, so Gold must be going higher as well. So reinstated the longs at a cheaper price.

QuaziJul 9, 2020 9:35 PM

Thank you!

robert.p.balanModeratorLeaderOwnerJul 9, 2020 9:37 PM

all PAM BUYS 144 NQU0 AT 10,710 LIMIT OR BETTER TO REINSTATE/REPLACE THE NQ LONGS JUST EXITED, FOR ALL FUNDS.

robert.p.balanModeratorLeaderOwnerJul 9, 2020 9:45 PM

NQU0 -- DONE AT BETTER 10709.20 BOUGHT 144 CONTRACTS NQU0 TO REPLACE EXITED LONG NQ TRADES, FOR ALL FUNDS. NQU0 LONGS BACK AT 528 CONTRACTS TOTAL.

1 replyJuly 9, 2020 9:47 PM

flamarkJul 9, 2020 9:47 PM

nicely done

robert.p.balanModeratorLeaderOwnerJul 9, 2020 9:49 PM

Thanks Mark.

stompalotJul 9, 2020 9:49 PM

Great work Robert

robert.p.balanModeratorLeaderOwnerJul 9, 2020 9:50 PM

Thanks stomp

clean.korJul 9, 2020 10:08 PM

Do you think the underperformance of DJ going to last?

robert.p.balanModeratorLeaderOwnerJul 9, 2020 10:15 PM

Against NQ yes, it will last for some time

clean.korJul 9, 2020 10:16 PM

So now you are net long (mostly NQ) but when you need to scalp the downside you will be using only YM?

robert.p.balanModeratorLeaderOwnerJul 9, 2020 10:19 PM

Could also be RTY even ES -- depends on the calibration for the day.

benrimJul 9, 2020 10:38 PM

the fed h.4.1 just released, balance sheet is down by 60 Billion , how do you think this will affect the week ahead

robert.p.balanModeratorLeaderOwnerJul 10, 2020 12:14 AM

It's already built in into the outlook of market weakness aFter a few days, benrim

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