“There’s an old adage, ‘don’t fight the Fed.’ Means that if the Fed is on a tightening course, don’t be long. And if the Fed is lowering rates, as now, don’t be short. Doesn’t always hold true, but often enough to [not] ignore. The Fed has a lot of tools to achieve its objectives.”

A mid-day report that the White House is considering steps to limit investor flows into Chinese equities helped the bears keep control, as the S&P 500 finished the week 1% lower for its worst close since Sept. 4.

Risk is still on. The trend is still up, no hedges on.

This afternoon, the crypto complex absorbed an intense downdraft, with the price of bitcoin falling roughly $1,000 and settling at $8,560.

Stocks came under pressure with the S&P 500 dropping 80 basis points, to narrow its 2019 advance to 18.4%. 

"Acceptance"

For many of us, acceptance is a hard thing to swallow. Especially when things go against us. Yet when it comes to trading, accepting the outcomes of all your trades, not just the good ones, is going to be key to your longevity.

There will always be situations out of our control that are going to see us giving back some profits. Or taking a loss. Yet just as we are happy to give ourselves a pat on the back for our wins, we also need to accept responsibility for our losses. After all it was us that pulled the trigger.

Here are a few tips and reality checks towards accepting everything that we do in our trading. Whether the outcomes end up being in our favour or not.

1. Failure can follow success / Success can follow failure

It’s easy to get over confident when you have a few winning trades in a row. It’s also easy to get down on yourself following a few losses. Yet this is the name of the game. Accept that there are ups and down in this business. So long as you have a solid methodology, don’t allow your psychology to second guess it.

2. Understand that there are risks in every trade

Everything in life is a risk. You can wrap yourself in cotton wool and never go outside the house to lower your risk of failure. Yet that is not what life is about. After you have taken a trade, if you are constantly looking at your phone and swearing at it when your trade goes against you, then you have not accepted the consequences of risk. When you do accept these consequences, sure you might swear about your loss. Yet you’ll get over it quickly and move onto the next trade.

3. Markets WILL move against you

Even your best trades will spend time back filling before moving forward again. It is the nature of the market. Accept the process and don’t panic yourself out of perfectly executed trades.

4. No one knows what the markets are going to do at any given moment

We say this a lot, yet as soon as we accept this fact as traders, life suddenly becomes a whole lot easier. Add this one to your affirmations and a weight will be lifted off your shoulders. Ego is about thinking that you know. Trading is about processes. And the discipline to follow those processes no matter what so called experts are yelling at you.

5. You are going to be wrong – A LOT

Accepting that trading is different to nearly every other profession is important. For one, you don’t have to be right most of the time to keep your job. Some of the most profitable and successful traders only win half the time.

Yesterday the Fed came in with a .25% rate cut, this rate cut should put a floor until big cap stocks pay out dividends equal to the 10 year note or higher.

The trend is now up, no hedges on. Risk on.

Stocks caught another bid, with the S&P 500 extending its gain for the week to 1.2% and pushing the broad index to within a few basis points of its July 26 high.

"Recap Sept. 3"

A dip below 50 in the August ISM Manufacturing PMI (its lowest since August 2016) helped the bears get the upper hand as the S&P 500 lost a bit less than 1%, while Treasurys rallied again with the 10-year yield falling below 1.47%.  Gold rose above $1,550 intraday for the first time since April 2013, while WTI crude fell back below $54 a barrel and the VIX finished at 20.

"There always remains an opportunity to make a new start."

Though it may not seem so when you first encounter a serious blow, you can never lose two of the most important assets you have. These are the power of your mind and your freedom to use it. Once you have turned them to understanding what laid you low, you can begin forming new plans. You may not have the money you once had; you may lack the allies you had cultivated. But you still have the benefit of a universe that eventually rewards honest effort, as well as gaining the experience of mistakes you will never make again. Remember, no matter where you are now, whatever you can conceive and believe, you can achieve.

"Success is not the key to happiness. Happiness is the key to success. If you love what you are doing, you will be successful."

"Recap Aug. 30"

Stocks drifted sideways to finish the week higher by a healthy 2.7% on the S&P 500, leaving the broad index near the upper end of its August range and within 3.5% of its high-water mark.  The highest close for the Dollar Index since May 2017 helped pressure commodities, as WTI crude and gold finished at $55 a barrel and $1,523 an ounce, respectively, and Treasurys ended little changed with the two- and 10-year yields both settling near 1.5%.  The VIX closed at 18.5.

The trend is still down, full hedges on.

"Recap Aug. 22"

Stocks shook off early losses to leave the S&P 500 little changed for the day, as the broad index sits near the upper end of its two-week range and green by 17% year-to-date. Treasury yields ticked higher across the board, with both the two- and 10-year yields settling near 1.62% (the three-month vs. 10-year spread remains inverted by more than 35 basis points).  WTI crude and gold settled at $55 a barrel and $1,499 an ounce, respectively, and the VIX rose 6% to 16.70. Meanwhile, economic data continue to indicate trouble, as this morning’s reading of the Markit Manufacturing PMI for August fell below 50 (indicating contraction) for the first time since September 2009.

Market Intelligence Report Overview

The market is oversold and made a momentum low...........but possibly not the price low. 

Volatility... staying with us for a while.

Investors... full hedges on.

Traders... to each his own.

Hedges did their work today. Moving down the stops on the short hedges and enjoying the ride.

"An overnight devaluation of the Chinese Renminbi pushed the exchange rate to more than seven per dollar for the first time since 2008 and spurred another sharp selloff, as the S&P 500 sank 3% for its worst one-day showing of the year.  The broad index saw its year-to-date gains whittled to 13.5%, and sits 6% below its July 26 highs

Treasurys ripped in near lockstep with yields declining 11 or 12 basis points across the curve and the 10-year falling to 1.72%, 35 basis points above its record close in July 2016. WTI crude fell back below $55 a barrel, while gold rose to $1,463 an ounce, its best close since May 2013.  The VIX finished above 24 and has nearly doubled in the last five sessions." 

Socks had another rough day, fell for a fifth straight day, with the S&P 500 wrapping up the week down a meaty 3%.

The hedging model is downtrend, full hedges on. Risk off.

"Recap July 31"

Stocks took a tumble with the S&P 500 finishing red by more than 1%, but well off its worst levels of the day.  The Treasury curve saw notable flattening, with the two-year yield rising two basis points and the long bond dropping five, and gold lost more than 1% to settle at $1,416 an ounce.  The VIX jumped to more than 16 and is up 33% so far this week.

Earlier today, the July Chicago PMI collapsed to 44.4, its worst reading since Dec. 2015. 

"The ISM-Chicago Business Survey, a regional view of the national economy, is a time-tested, market-moving report. The CHICAGO Report is available to subscribers 3 minutes before its release to the public 8:45 a.m. CT on the last working day each month. The Chicago Business Barometer, summarizing current business activity, also is known as Chicago Purchasing Manager Index or Chicago PMI. The Barometer is considered to be a leading indicator of the USA economy."

"We mustn’t give up. Ever.”

“How much of what I know, what I’ve been culturally attuned to believe, feels like the set of a play on a strange stage I’ve wandered onto without knowing why I’m here. I don’t know the lines, I don’t know what part I’m playing, I don’t even know what the play’s about or what it’s called. I’m just here onstage, stuck in a dream, lights shining in my eyes. Is anyone out there watching? The play stumbles ahead, feels like artifice, mistakes, frippery, an endless series of false starts, bad assumptions, all the while shadowed with the constant horror that something unforeseen could drop down on me from above or lurch in from the wings at any moment, that the floor could open beneath me and instantly erase even this small, pitiful existence, put out the lights for good...There’s only one redeeming feeling I can cling to...when it’s all stripped away and you realise you’re the only one who can put the pieces of yourself together, by yourself, alone...I’m noticing it has a tendency to focus and sharpen the mind, and strengthen the will to live constantly with all my senses wide-open to the here and now. One clear idea emerges from that crucible...We mustn’t give up. Ever.” - Mark Frost in Twin Peaks: The Final Dossier

"Recap July 26"

Another blistering rally left the S&P 500 higher by nearly 2% for the week and 21% year-to-date, as the bulls can seemingly do no wrong at the moment.  Gold managed to eke out a modest gain and WTI crude held at $56 a barrel, and Treasury yields inched lower.  The VIX closed just above 12, its lowest weekly finish since April. 

"Recap July 25"

Stocks lost ground, with the S&P 500 falling 50 basis points to narrow its gains for the week to less than 1% with one session remaining.  The VIX popped back toward 14 and gold extended its recent pullback to sink to $1,415 an ounce while WTI crude held at $56 a barrel. Treasurys came under notable pressure, with the 10-year yield rising back to 2.08%.

"Who has a lot of money, can speculate. Who has little money, must not speculate. Who has no money, has to speculate."

A decent day for stocks with a weak opening that lasted until mid-day when buyers came in and bid stocks up filling the morning’s gap down. Most stocks closed positively with Chip stocks leading the way with huge gains on negative earnings from last year this time. This usually doesn’t last long as shorts are covering en masse as they are trapped at these levels.