Which Way Wednesday - Waiting on the Fed Minutes

You are very welcome!  

Yesterday's morning post (which you can get, pre-market, every morning by subscribing HERE) was titled: "Trendless Tuesday – Watch Yesterday’s Fake Gains Disappear" and, if that wasn't enough of a hint of things to come, despite the Futures being positive at the time, I even let the free readers have a look at our Live Chat Trade Idea for playing the Indexes short, saying:

I've already put a note out to our Members to short the Futures in our Live Member Chat Room:

People are starting to notice China's debt and that's not a good thing.  After a brief flirt higher, we're back to Dow 17,650 (/YM), S&P 2,060 (/ES), Nasdaq 4,375 (/NQ), Russell 1,112.50 (/TF) and Nikkei 16,720 (/NKD) and I wouldn't use /NKD but the others all make good shorting lines to play (if 2 are under, short the laggards, look for last others to confirm and tight stops if any go back over).  

As you can see above, we had a nice $2,000 per contract gain on the Russell and the Dow hit 17,450 for a $1,000 per contract gain with the S&P hitting 2,040 for a $1,000 per contract gain and Nasdaq fell to 4,320 so 55 points at $20 per point is $1,100 gained on each of those contracts - not bad for a day's work!  

Keep in mind though, that that comment was a quote from our Member Chat Room at 7:42.  In the course of writing the post, we decided to add back the Nikkei short as well as it tested 16,700 and we caught a $750 gain per contract move to 16,550 after coming in just shy of our 16,500 target.  All in all, that's $5,850 in winning trade ideas in yesterday's morning post - now isn't that worth $99/month?  Or, as noted by Newthugger on Monday afternoon, regarding Friday's Apple (AAPL) trade idea (also in that morning's post):

Phil, Thanks also for the long calls@ $ 85 on AAPL.  A quick $4900.  Paid for my subscription!!

We don't put up new trade ideas every day - only when we think there's a trade with a high probability of success.  It doesn't mean we get it right all the time but it does increase our winning percentage considerably (see our Q1 Top Trade Review for example - 15 winners out of 16 trades and the loser is our favorite trade into the 2nd half of the year).  

This is why I get annoyed when I see you guys gambling – you can make this kind of money by waiting PATIENTLY for opportunities to make SENSIBLE investments like this (our FCX trade featured in our February Trader's Expo Presentation) – so why mess around with BS stocks in-between?  As I said over the weekend, if you start out LOOKING for a stock – using screens or whatever – then you will end up with the best of the random batch you are screening - not necessarily a good stock at all.  If, on the other hand, you start off by reading the news and paying attention to the global macros – then a clear trade idea will present itself and THEN we find a stock that fits in with the big picture moves we are fairly certain will be happening. 

It's like looking at a supermarket parking lot that's next to a road that goes north and south and trying to decide which cars will go north or south.  You may have some clues (high school stickers maybe) but you can't know for sure and you'd be lucky to be over 50% in your guesses.  If, on the other hand, you pulled back to the bigger picture and studied the lot longer and waited PATIENTLY to see which way cars came from before they parked and then waited to see who put in a lot of groceries, especially ice cream and were very likely going straight home – then you could drastically up your percentages by betting on only the cars where you have better information.  Fewer bets with a higher winning percentage!  

That's all it is with the markets too – I wrote a watch list on Nov 14th and, in the last 6 months, we've added trade ideas on...

The rest is classified for our Chat Members Only, but you get the idea.  On boring market days we tend to have strategy discussions and yesterday was kind of boring for us as it was the action we expected and we had gone into the weekend very well-hedged.  In fact, our Short-Term Portfolio gained $9,745 yesterday while the Long-Term Portfolio it is protecting lost just $3,843 so our downward bias is confirmed and our balance is working perfectly - which all makes for nice, boring days when the Dow drops 200 points.  

We're not expecting much action into the Fed Minutes today (2pm).  Both Atlanta Feds's Lockhart and San Francisco's Williams have said we can expect two additional rate hikes this year so market prognosticators will be looking carefully at the Minutes to get the tea leaves on the upcoming June meeting.  I think June (15th) is off the table and I was predicting just one hike this year, probably in September (21st), but yesterday's CPI showed signs of life so two hikes are now a real possibility - and you know the markets will not like that - so we're still bearish this morning.

Nonetheless, we liked betting oil (/CL) short at $49.20 in our Member Chat Room this morning along with a long position on natural gas (/NG), now $2.01 and we'll see how those go for the day - it would be cool but unlikely to win at both and we'll be taking quick oil gains off the table ahead of the 10:30 inventories and then we'll have to make a call after to see which way we think things will go but lower than $49 is my bet, either way.  

Getting back to AAPL briefly:  Bernstein's Toni Sacconaghi is back on the horse with us and giving Apple a $135 price target, which agrees with our Jan, 2018 target (see Monday's post for our take and trade idea, which is still playable).  That takes APPL on path to a $1Tn market cap - and it's a race with GOOGL to see who gets there first by the end of the decade.

We have our weekly Live Trading Webinar at 1pm, EST, where we'll be analyzing the Fed Minutes live, as they cross the wire at 2pm - should be great for some Futures trading!