Global Macro Trading Journal

Stocks are oversold and bonds are not having a lot of haven buying. I sold most bonds today. Expecting a bounce in stocks over the next 2-3 days
 
I wish I had done a better job at catching this short on ES/SPY. I shorted a small position during the new year ramp (in the 2050-2100 defensive area) but as soon as SPY reached 200 I covered it all. Failed to re-short at pop to 201 and then just watched the collapse down to 188. What threw me off was the multiple rallies from low 2000s to 2050+ constantly since October. That chopiness made it though to short and not cover because it would ramp back on you again and again. I guess this was the last bulls still fighting the idea that the market was in for a correction, they would desperately buy any dip. But then the smart money would unload into those pops and the rally would die out, this became the lower highs in the chart. It also didn't help that I got caught in the October squeeze, that one hurt my confidence in fighting this market. I really thought that one was it, I still can't believe that thing ripped from 1880 to 2100. I mean, jesus christ, everything that is true now (HY meltdown, China weakning yuan, Fed on tight mode) was true back then, yet somehow people though that longing the market all the way to 2100 was a good idea. Incredible

At least I had bonds to hedge against some of my stock losses (mostly on PSH). But I wish I had bet AGAINST the idea of a hike using Fed futures, I stopped monitoring them after the hike but I should have longed the april contract. They rose as stocks tanked. I don't think the Fed is going anywhere with stocks in a slump. The latest comments from Lockhart and Kocherlakota makes me thing the open mouth operations might be starting
 
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As of right now, its too late to short (unless as a day trade). What can be done is to use bonds as protection. In october this worked, sure, they went down but mostly at the end of the month. Because the rally was fed induced that provided some support and the 10y held up even though stocks were flying. A similar thing could happen now, its a way to 'short' the market without risking getting your face ripped by a rally. Thats what I should have done in october, covered it all and used bonds to 'short'. The risk is that some dynamic comes in (China selling USTs or Fed hike bluffing) and they sell-off. But thats the thing, the bond market is a bit tough right now. Its hard to know exactly what will rally and by how much, best points in the curve, etc
 
If I get assigned on BRKB I will have one problem though. I got about 15-16% in equities right now, if I'm forced to buy BRKB, this will rise to 37%, if I add the 15% in BR USD bonds, then I got 50% in risk assets. This would leave me vulnerable to a drawdown if risk assets continue to get pounded this year. Even using UST bond futures, it would be hard to protect against further downside, unless I employ a lot of leverage which I don't like to do.

But I have noticed something good since I started to 'invest' more. Since I became a day trader in 2012 I avoided investing because I found mentally distracting to have losses in the investing side while I was trying to make money day trading. I'm now noticing an advantage, the losses in the investing side are now so much higher than most of my day to day daytrading losses that they are making me more comfortable with bigger bets as a daytrader. I noticed I care less about gains and losses because my brain got more comfortable with bigger $ swings. Its an unusual thing that I have never read about before, that is, becoming a better day trader by being an investor. But its happening for me
 
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