Live Trading System Signals on 11/01/2024

We traded the latest portfolio in anticipation of a contrarian change in tone on the first day of the month and some last-minute opportunities for positioning before next week. The market started the day session with some nice price action. By the end of the day, it was just a slightly different version of what happened on Wednesday as the market mispriced the open with the excess liquidity once again and then spent the day slowly rolling over without making it all the way back to the lows the way it did on Wednesday. The desire to support 20,000 in the Nasdaq futures this week will probably be in vain for next week's trade.

The Jobs Report was the worse Jobs Report since the pandemic. The market discounted it based on the recent hurricane and the fact that it is favorable for the Fed to lower rates next week ("cheaper money for Wall Street").

The live results for the One Million MNS 112 was -0.29% today while the 250K Portfolio was down -$575 in live trading.

The hypothetical results for the Stock Index Portfolio 18 was -$9,960 per E-mini and -$996.50 per Micro for a very rough day and representative of the nature of the market environment that we want to avoid next week.

The VIX closed at 21.88 and Bonds continue the downtrend. Stanley Druckenmiller is said to have 20% of his portfolio short the Bond market in anticipation of higher inflation based on continued fiscal and monetary stimulus.

The markets can change their tone on the month and trade differently than we could imagine. There are times when the market has favorable tone and price action prior to FOMC followed by unfavorable price action and sloppy market conditions. The contrary condition is when the market is unfavorable and sloppy prior to an event and then favorable during the news event. The current cycle has been sloppy for several weeks. Sometimes markets change at the beginning of the month. We have an unusual week coming up with both an election and FOMC meeting. We have a stock market that is more and more dependent on government and the Federal Reserve. This causes markets to focus more and more on elections with seemingly more nervous price action.

Sloppiness comes from the lack of participation from institutional investors/traders. I don't believe they will make serious decisions next week, but I could be wrong. The wild price action that could occur next week and during FOMC and economic reports does not come from massive buying or selling but from a thin order book that can be easily pushed around.

We will pause live trading for next week in anticipation that the markets will continue to be sloppy until after FOMC and possibly longer depending on the events and clarity of the outcome. The FOMC meeting is on Thursday instead of Wednesday next week. We would normally pause trading on FOMC.

It is certainly possible that the markets could trade with great certainty next week and generate many great trades while the portfolios go to equity peaks during. It is difficult enough to try to predict a binary outcome but trying to predict the nature of the markets is even more challenging. It would have been ideal to be at equity peaks and then pause trading election week. The risk of continued sloppy market conditions next week are too high, so we will pause live trading all week and prepare for post-election, post FOMC trade. Worse case scenario, we could see FOMC type price action all week. There could be limit moves and order rejects from the exchange. If you trade, you better know where the limit moves are and keep your stop losses on this side of those limit move points. Make sure to sync up with your strategy if you do receive any order rejects.

We still plan to finish the year strong.

I have a long list of research to publish. Researching and publishing helps give me clarity in trading. I look forward to sharing some ideas from Python next week as well as any portfolio updates that we find.

Do you remember the 2016 election? The market went limit down at midnight and then rallied.