"Jackson Hole" has delivered volatility once again. Seems we can always expect fireworks when the bigwigs gather at a luxury resort in the mountains. Must be nice...
We're going to take advantage of some of this volatility by positioning into a delta-neutral credit spread in the highest implied volatility ETF currently on the board.
Identifying trends is one of the most important jobs of a market technician. Regardless of our time horizon, we have to understand the general direction the market is taking.
It sounds simple, but it’s the foundation of any market thesis.
Once we have the underlying trend nailed down, we can focus on the areas of the market we want to exploit and pinpoint the best tools and strategies to do so.
When I think of the most critical trends to date, my mind immediately goes to interest rates. Rising rates and inflation have been the key drivers for two years now.
Despite some corrective action in recent months, the bond market has been reminding us that we’re still in a rising-rate environment.
Let’s take a look.
First, we have an overlay chart of the US 10-year breakeven inflation rate and the US 10-year yield:
During our “Trendlines over Headlines” conversation last week, Patrick Dunuwila and I spent some time discussing seasonal patterns in the stock market. Among the inputs to our cycle composite is the 4-year Presidential Election cycle. The tendency for stocks to make a pre-midterm election low and then see sustained strength in the year between midterms and the Presidential election is well-advertised. The stats around this are pretty amazing. On average, stocks bottomed two months prior to the midterm election and, despite a few close calls, the S&P 500 has been higher one year after every mid-term election since 1950, on average nearly 15% higher.
This is often ascribed to the market’s preference for certainty. When the balance of political power is unknown, stocks weaken. When the outcome of the election becomes more obvious, stocks rally. This is regardless of which party that outcome favors. It’s a plausible story as far as it goes.
There's nothing more annoying than a stubborn injury that just won't go away. All you want is to exercise or to play a sport, but you're just physically unable to do it.
Among high-level athletes, there are countless stories of seasons, careers, even livelihoods lost due to injury.
I'm quite possibly the furthest thing imaginable from a high-level athlete, but I have been dealing with a minor shoulder injury of my own.
I'm working with physios to get some mobility on my left shoulder back so I can finally make use of the home gym I've recently built in my garage.
It certainly wasn't an acute injury, more of a cumulative thing worsened by living a lazy university student's life. And it's correctable. It might not be easy, but it can be fixed.
There are many types of injuries, some the consequence of normal use, some that stem from genuine human error.