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Wednesday, September 20, 2023

Trade Like A Hedge Fund

In Order to get up to speed on today's update, you may want to review yesterday's update: 

Big Bearish Reversal Confirmed; Bitcoin, Commodities, $SPX, $Oil, $VIX, Cocoa


Picking up where we left off:

As I've been talking about over the past several months - even before it had become clear that volatility is being aggressively sold; through the use of 0DTE Options - why anyone would continue to cling to the $SPX/ SPY  trade is beyond me! 

Every day it's the same old shit, as I summed up in my blog entitled Groundhog Day Markets continue...   

Yesterday's action, looked the same as any other day
What's the solution? 


Trade like a Hedge Fund: 

Drive tech to new highs on light summer volume, with the help of an "AI Boom" story, and then do the same with thinly traded energy stocks, with the help of a "Saudi Oil Cuts" story. Think the Saudis aren't in on this scam? I'll bet Goldman Sachs has a direct line to the Saudi oil minister!    

Remember when they drove Oil contracts to 0, on the idea that Russia, and the Saudis were in a race to see who could pump the most oil, and investors swallowed it hook, line, and sinker. 

And then there was the time when they drove Oil to new highs, just ahead of a financial collapse, on the "Peak Oil Theory", story. I guess nobody saw oil sands coming - being sarcastic.  

The Next Trade 

I can't tell you exactly where the next sector rotation will take place, but with a little due diligence it shouldn't be too hard to find. 

Small Caps is just one possibility, as we continue to see heavy selling in this sector. 

Retail is another, as we see retail being crushed ahead of the holiday shopping season, but I have many things I'm watching, and - as usual - I'm keeping my cards close to my chest.  

Getting back to commodities trading 

Trading commodities probably isn't for the average investor. In fact I know it isn't!  

There's an old saying; "a fool and his money are soon parted". 

Trading commodities has margin requirements, and trading on margin requires proper money management, and extra discipline, and that's going to be a deal breaker for most retail investors.

Oil  


I've been killing it! In other words, I've been right all along. From the continuing rally to near $96.

This morning 



Wait! Breaking news: Jim Cramer is a technical oil trader now! 

Don't bother clicking that link, CNBC will want you to pay to view the  content, and I can tell you that he's calling the top in oil, just as he did last Oct. Must be a seasonal thing....


Of course, I'm probably not going to be giving away any more free targets in oil, or even Cocoa targets, for that matter, but this I can tell you, bullish traders always buy the dip in a bearish reversal, because - to 90% of traders - it looks like a pullback.  

This time should be no different, so Oil is already poised for a powerful snapback rally on another weak (dovish) fed announcement.

Cocoa 


After doing a little digging; I found I can actually trade most commodities - including cocoa - using Schwab (TD Ameritrade), but there are several other alternative options... 

Take care,
AA 


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