I don't understand the money flows anymore, the economy is being pumped and the last time every Joe Soap was throwing money into the markets which were rotten.. 1929.
Look, I just trade futures and I do it in a very simple manner trend following two instruments with a little AI spice to keep my zigs and zags in the green. I just have a baaaaaad feeling the piper has to be paid, but hey maybe for the first time ever it does not.
The money flows? The shorts are allowed to have a few hours of fun as the market makers quietly accumulate on the bids and eventually the shorts cover. The market makers are backstopped by the Federal Reserve, if needed.
In my perception, we are closer to the beginning of a record bubble than the end. It is like it’s 1998 in the dot com bubble. A few more years to go. Along the way, we will see monetary debasement at a faster rate than normal, but it may not get crazy as tangible assets, except top quality land, will likely see tepid demand versus historical norms.
There are demographic headwinds to the global economy with Baby Boomers retiring and dying. There are cultural headwinds of “Less is more” and the shared economy reducing demand for manufactured goods. There is a high utilization of debt by all levels of government, by businesses, and consumers. Sounds pretty risky, doesn’t it? Speaking of risk, it does not seem risk taking and speculation are near historical levels that often preceed a reversal. Energy is plentiful as is land of various quality, allowing major economy stimulating infrastructure projects to take place, if needed. At some point, there will be a need for a reset, for which there will be resistance. How painful and how long the resetting process lasts will depend on leadership. Perhaps something along a Trump/Kamala type of Presidency and Vice Presidency would be beneficial, if the Vice President had real authority in their area of expertise. In other words, greater balance within each dominant political party is more likely to create a responsive leadership environment of the challenges in the years ahead.
If you are thinking of getting back into trading, maybe do a little gamma scalping using ES put butterfly spreads for your negative deltas and leverage it to taste while you get acclimated again. Built in edge as you get convexity
AND positive theta. Structure according to your preference and what the market offers: More convexity for less positive theta, etc. Hedge or overhedge your short deltas with ES according to the edges that may present themselves throughout the day as you’ve done before. Overnight, remain fully hedged unless you have a high confidence setup to take on some delta. With positive gamma, large moves in either direction will generate profits unless vega exposure becomes an issue. Try shorter dated bufferflys or have a vega hedging strategy. I would remain conversative with my exposure if not actually watching the position, although stops, alerts, or automation can provide a substitute to watching. Obviously, if put skew changes, the value of this strategy will change, but at least you may have a early heads up on a major sentiment change.
If you don’t really understand some of the terms above, read up a bit and start smaller. Or simply wait for a four hour correction and then look for long setups for the rest of the week(Tongue in cheek)!