Trader Note

If a big move up in US, don't sell in Asia until midday. Reversal into EU trade expected.


Apple & ES. Bitcoin. Sugar.  See: EVENTS

This Week

There is very little to drive markets next week except the ECB press conference. Continued weakness in the Hang Seng should follow through into US markets. Continued political risk in Europe should dampen expectations…

(Read this in a very sarcastic tone) OR the world is sunshine and lollypops and you should extend your risk and leverage buy every market dip. Also, sell every move higher in the VIX to double your profits.



I am publishing early this week because I suggested selling the S&P yesterday and have gotten it wrong. I thought ES would take a nice turn lower, but it hasn't (yet). Right now, it looks like the BTFD traders have managed to hold prices. The best I can do it buy some cheap Puts and hope the trade materializes… but I have low expectations in this market.

THIS IS NOT A NORMAL MARKET. In a normal market, when prices hit all-time-highs for many consecutive trading sessions, then the price pulls back. When market participants are uncertain (not scared, only to the level of not certain) then markets will often pull back. When governments remove the money printing machine that has driven markets to feverish highs, then we should expect those markets to move lower. We have all of that.

We also have Apple pulling half of their recent iPhone manufacturing order (killing half their product future sales) because of lack of demand. This has lowered expectations on their shares which have traded at a massive premium (overvalued PE) based on future sales of their overvalued products. As 3% of the S&P, and a primary company carrying the tech stock sector, it should be expected that this selloff of Apple would result in a dip in the S&P.

10 years ago, Apple news like this would have generated a dip of at least 3% on the S&P futures contract based on Apple and their suppliers moving lower. That was before BTFD and central bank money was in control of these markets. That was before Apple bought Beats By Dre for US$3,000,000,000… instead of just turning to bass all the way up on their output mixer. So if you trust this market, then put those overpriced headphones on, and BTFD. If you trade this market, then never think about this: Engineers do NOT buy Apple products.

I may sound bitter for having made a bad call…. And I am salty about it. I pay my dues in cold hard cash. My losses ARE my payment in blood. So, believe me when I say that this is not a sound market.

This market SHOULD be moving lower, but it is not. Thus I must decide if I exit this market completely, to avoid such manipulation risk OR do I join the sheep and hope for the best?

Sheep get slaughtered.



Bitcoin has hit all-time-highs. It will be pulling back from those highs. Before that happens, we may get a short squeeze and an extension to the recent push forward.

This is how a NORMAL market trades. This lack of blatant manipulation and intervention is why banks and governments fear such markets. They cannot do much to manipulate a market that transacts a volume of $1.5 billion in 24 hours ( across every country in the world.

Another reason for a pull-back is that in November there will be a code split. In the lead up to the split, then sellers will be in control of this market. After the split, it will be a buying frenzy again. Speculators can only drive the price slightly higher until profit taking occurs before this expected sell-off. Profit taking will overwhelm speculative money, diving prices lower. We are in the zone of those profit taking levels. Anyone that has doubled their money since the last split (or close to it), will be looking for an exit and re-entry just like September price moves. So don’t be afraid to take some profits and buy back in on a dip.

Long term, the outlook for Crypto-currency is very good (As long as there is an internet, there will be Bitcoin). So if you are being lazy or don't want to trade a core position, you can sit on your position. It is highly likely that prices will be back to these levels soon, but you will just have to ride the dip first. So pucker up for the ride.

Something to bear in mind about the long term success of Bitcoin is the need for nodes. Nodes are the computers that enable transactions to occur. Currently, nodes do not receive any compensation, only miners get paid. For the continued use and extension of Bitcoin, miners (or trading hubs) will need to provide nodes. This will one day limit the spread of Bitcoin, but that is tomorrow's argument for you long term investors. Here is more information on that:



"It is never too late to sell sugar." - Anonymous

Look for a lower sugar price over coming weeks. It is a good time to buy some puts or sell some futures. The March 2018 contract gives enough time to make a decent chop and still have time value left in the contract. Currently, the chart looks like it is setting up for a decent move lower. Look to exit this trade before the New Year; don't ride it too long.

There seems to be a bumper crop of sugar beet in Europe this year (20.1M MT in 2017 vs 16.5M MT last year). As the EU likes to give farm subsidies, this will mean that plenty of cheap sugar will be hitting the world market soon. It also means that there is an expected cut to EU imports of 2 million MT. This is the first year since 1967 that the EU export restrictions have been lifted, so much of the excess production sugar is going to hit world markets. World sugar markets are about to experience high volatility and lower prices.

So it is a very good time to short sugar.

A bit of negative press might have the EU scared of giving sugar farmers too much, so keep an eye out for rehashing of this news story to put negative pressure on EU leaders:

Other References:

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