15 Dec 2021

Here are 2 very different seasonals.

At 3pm NY time almost every day this month 10yr Treasury Note futures are spiking, could it be that the kids are playing with the controls while the adults are out for a tea break. Perhaps more relevant to our lives is the fact that 134% of the total annual flows into equity mutual funds and ETFs happens in January based on the last 24yrs of data. This seasonal effect will certainly provide some air under the wing of a new rally.

Been an interesting market overnight with my short S&P500 e-mini futures paying off. In fact all 5 of my positions were in the money which is rare. I have trimmed all my open positions as we head into the Fed announcement Wednesday. Frankly anything can happen in the short term, I don’t like trading around news events and today feels like the Super Bowl of news events, especially with options expiry for the year this Friday.

A word of advice don’t live in Australia and wake up at 4am if you enjoy trading US Futures, its easier and cheaper to live in the US.

I share 2 yields curves from the US the classic 10yr over the 2yr is flattening quite sharply through the second half of this year. More interesting is how the longer end 30yr versus the 10yr is about to invert. I don’t have the charting data for the 20yr but the 30yr over the 20yr has already inverted. This spells one thing – RECESSION.

However, only 6 out of 100 investors believe there will be a recession in the next 12 months according to a fund manager survey by the Bank of America. I guess that means surprises to the downside make sure you are carrying protection, and in case you were wondering protection is actually getting pretty expensive these days.

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