Caffeinated thoughts from a full-time software developer/part-time trader

[krugman25]

This is a journal to discuss trading and current events affecting the market. I also plan on posting projects I am working on, software development or just any random thoughts about life.

A little info about me - I have been trading candlestick patterns for about 7 years now. I trade trade just a handful of setups that I deem to be high probability. I also sell options for a delta neutral, premium selling strategy. I also trying to slowly build up a long term portfolio that will have about 1/3 weighing to beat up commodity producers and 2/3 technology.

Grab a cup of coffee, sit down, and chat a while.

 

[krugman25]

Inter-Market Correlations

 

[krugman25]

Current Portfolio Correlation - 0.08

 

[tommcginnis]

"...beat up commodity producers"

So, the "beat up" part -- is that more on the demand side, the supply side, or are you more, "beat-up agnostic" and just looking for discounts? (Or, have you thought about it like that?)

Indeed, is this Corn(s) Of The Cow, rather than Dogs Of The Dow?

 

[krugman25]

So, the "beat up" part -- is that more on the demand side, the supply side, or are you more, "beat-up agnostic" and just looking for discounts? (Or, have you thought about it like that?)

Indeed, is this Corn(s) Of The Cow, rather than Dogs Of The Dow?

beat up commodity producers

Looking at the producers. There is a lot more that goes into it than that one simple sentence expresses, but I will just say I look at the sectors individually and the entire commodities complex altogether. I like to look at the ratios between markets, like the GSCI Commodities Index vs SP500 for example. I also like to look at individual metrics such as sector CAPE ratios, pb, ps, etc. Looking at all of that just to see where we are sitting within historic norms.

The precious metals complex has had my interest for a long time, but I just don't think I will get there. I will likely start nibbling at the energy sector soon and maybe industrial metals sector.

 

[krugman25]

Looking green so far this morning. A lot can happen in 7 hours so we will see, but hoping some volatility gets sucked out of these markets.

 

[MarkBrown]

an interesting correlation sheet i saw once was where one lot of gold was made as the base of all the commodities and then it showed you how many lots to trade in all the other commodities using gold as the base. it was a excel spreadsheet i think.

 

[krugman25]

https://twitter.com/x/status/1166465448524832768

 

[themickey]

Looking at the producers. There is a lot more that goes into it than that one simple sentence expresses, but I will just say I look at the sectors individually and the entire commodities complex altogether. I like to look at the ratios between markets, like the GSCI Commodities Index vs SP500 for example. I also like to look at individual metrics such as sector CAPE ratios, pb, ps, etc. Looking at all of that just to see where we are sitting within historic norms.

The precious metals complex has had my interest for a long time, but I just don't think I will get there. I will likely start nibbling at the energy sector soon and maybe industrial metals sector.

Would you care to expand on the reason for this sentiment; "The precious metals complex has had my interest for a long time, but I just don't think I will get there".
Do you believe it is different from any other sector or commodity that it would be deemed unsuitable?

 

[krugman25]

Would you care to expand on the reason for this sentiment; "The precious metals complex has had my interest for a long time, but I just don't think I will get there".
Do you believe it is different from any other sector or commodity that it would be deemed unsuitable?

This is a fair question. I don't think it is tremendously different from other commodities but there are differences. I will say it is not completely off the table for me and I may nibble on some here in the near future, but there are a lot of opportunities in the entire commodities complex (softs and hards) right now. I don't like miners and I would not invest in physical, but I would be willing to get a position in PMs through streaming and royalty companies.

There are 3 sorts of macro plays I want to position for. The first is an industrial play. Industrial commodities have not participated in the 10+ year bull market, and many are near their long term lows right now. While I think this bull market is long in the tooth and there is going to be a global slowdown that takes hold, there is still tremendous growth in emerging economies. So my play there would be industrial commodities at a historical low with emerging market growth that I think will more than compensate for a global slowdown.

The second play is a gold/crypto play focusing on massive global debt, massive negative yielding debt, a possible dethroning of the USD as the world reserve currency, and other very nasty things that go along with that. I think both crypto's and precious metals will explode, far higher than anyone expects. Look at the price action just these past few weeks. Only a few % off ATH's in the markets, and some uncertainty and gold and silver are rapidly climbing. How much more when the very bad things actually happen?

The third play is a play on robotics. As a software developer and specifically an IIoT full-stack developer, this is something I have my finger on the pulse of. The future is AI, robotics and automation. While the time to make mega gains in cloud computer and online retailing has mostly come and gone, robotics and AI is in extreme infancy. Growth in robotics and AI will be the next .com, online-retail, cloud computing growth story. Heck, my full time job is to write automated processes that replace the human element, so I know where this is all going.