The ACD Method

SteveM said:
Wow, crude is getting pummeled. Looks like it is going to test that $43 bottom from September...if that doesn't hold, next stop is a retest of the July $39 low?

Edit: ...and as soon as I post this crude has a massive rally :)
More...

The fundamentals for energy haven't changed...they absolutely suck across the board for oil and gas both. What has been volatile is the sentiment. The sentiment in both oil and nat gas have gone from overly bearish to overly bullish back to bearish.
 
Maverick74 said:
The fundamentals for energy haven't changed...they absolutely suck across the board for oil and gas both. What has been volatile is the sentiment. The sentiment in both oil and nat gas have gone from overly bearish to overly bullish back to bearish.
More...
Too headline driven for my taste. Saw a piece on my Twitter feed that Saudis said if Iran will not agree to cut output, they will pump all out to drive the price down. Bingo, price goes down. Worse than Central Bankers talking.
 
justrading said:
Too headline driven for my taste. Saw a piece on my Twitter feed that Saudis said if Iran will not agree to cut output, they will pump all out to drive the price down. Bingo, price goes down. Worse than Central Bankers talking.
More...

This is why I focus all my attention on the energy curves. The curves are very fundamentally driven and ignore most of the outside noise. They are also easier to model then flat price and ACD works much better on spreads then on flat price anyway.
 
justrading said:
Mav, I noticed that Maintenance Margin on NOB reduces to $525 during RTH.

Are there folks who daytrade this? Comms would add up pretty quick.
More...

Sure, prop firms this is all they do. They collect liquidity from the spreads and the exchange rebates. But the trade itself in my view is more of a long term macro trade. It usually moves pretty slow and it's pretty boring so not sure why you want to daytrade it. Prop firms are usually just trying to monetize liquidity.
 
Maverick74 said:
Sure, prop firms this is all they do. They collect liquidity from the spreads and the exchange rebates. But the trade itself in my view is more of a long term macro trade. It usually moves pretty slow and it's pretty boring so not sure why you want to daytrade it. Prop firms are usually just trying to monetize liquidity.
More...
That would make sense. I was watching the Bid-Ask on TWS, it's like watching grass grow, but low intraday margins always attract punters for some reason. I think macro makes sense and overnight margins are not bad anyway, just need to position size correctly for the choppy ride.
 
justrading said:
That would make sense. I was watching the Bid-Ask on TWS, it's like watching grass grow, but low intraday margins always attract punters for some reason. I think macro makes sense and overnight margins are not bad anyway, just need to position size correctly for the choppy ride.
More...

Here is what I'm saying. One of the core ideas I have beaten down on this thread since 2009 is using ACD to get a better understanding of the market and to find opportunities that others are missing or neglecting. No one is talking about this trade right now. Everyone is talking about a stock market crash that won't happen or Gold going to 10k or the vix popping or trying to scoop up stocks on the cheap but no one is talking about the yield curve and as a result, this trade is clean, quiet and consistent. At some point, like all trades, that will change. But my personal opinion is the black swan in this market is not a stock market crash, I think stocks are dead money for years to come. To me, once interest rates start going higher, more specifically the back end of the curve, it will be unstoppable.

We have a few catalysts coming that will ignite the fuse, the first is, both candidates are definitely going to launch massive fiscal spending programs via infrastructure improvements. This will put upward pressure on rates in a time where they are kind of teetering already. Two, the FED has been already tightening the money supply by letting their long dated treasury purchases roll down the curve and letting them expire. This has equated to a stealth tightening that people are missing.

Three, demand. The economy is very strong, it's just not terribly equitable for everyone. They only way to bring that equality is through populist policies that are inflationary by nature.

All three of these things will contribute to a steepening yield curved no matter which way the stock market goes. This is THE trade. I've only handed a few of these gems out over the years. The breakout in Bonds in 2011. The USD/JPY breakout back at 85 before the run to 125 and the US Steel trade literally days before it doubled. THIS is the TRADE. It's already had a massive move the last week so please take the time to learn about it and understand it and buy on pullbacks.
 
Maverick74 said:
To me, once interest rates start going higher, more specifically the back end of the curve, it will be unstoppable.
More...

Mav, can the less sophisticated of us express this trade through buying the Ultrashort 20-year US treasury etf (TBT)? Thanks.
 
You must log in or register to reply here.
Back
Top