TRACKRECORD DAILY
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TRACKRECORD DAILY

How to NOT lose your shorts to the New Kids on the Block?

You may think the new trading kids on the blocks are irrational, but the market can always stay irrational longer than you can stay solvent.

MARKET OBSERVATION

Coal Power

Nat Gas Futures Strip

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DAY AHEAD

The Bank of Canada is expected to keep policy unchanged. Though it was the first of the major central banks to start tapering their bond purchasing programme, and will keep an upbeat tone, it will likely not increase the pace of tapering. A more hawkish than expected message will give the recently strong CAD impetus to rally more.

TRADING PLAN

1. Currencies: Keep short USD and long NZD, & CNH. Resistance for USDCNH is at 6.40–6.42 level, and it is a level to increase short positions as market price trades closer. Stay short USD and Long CNH & NZD.

WHAT HAPPENED YESTERDAY

As of New York Close 8 Jun 2021,

  • The US 2-year Bond yield decreased 2 basis points to 0.14%. 10-year yield fell by 4 basis points to 1.53%. The bond market feels ready to rally hard, pushing yields much lower as the market is heavily positioned for the inflation story, and a low inflation print will likely set off stops from leveraged punters who are hoping for the Federal Reserve to be wrong on inflation.
  • S&P 500 closed relatively unchanged on Tuesday after flirting with all-time highs during the session. The Nasdaq (+0.1%) and Dow Jones Industrial Average (-0.1%) closed mixed and little changed, while the Russell 2000 (+1.1%).
  • Meme stocks remained an entertaining sideshow for the market despite some participants voicing honest concerns about their unprecedented runs. Shares of Clover Health (CLOV 22.15, +10.12, +85.8%) and Wendy’s (WEN 28.87, +5.93, +25.9%) surged noticeably amid increased mentions on the WallStreetBets subreddit. CLOV was targeted as a short-squeeze opportunity.

HEADLINES & MARKET IMPACT

U.S. Senate passes sweeping bill to address China tech threat

Notable Snippet: The U.S. Senate voted 68–32 on Tuesday to approve a sweeping package of legislation intended to boost the country’s ability to compete with Chinese technology. The desire for a hard line in dealings with China is one of the few bipartisan sentiments in the deeply divided U.S. Congress, which is narrowly controlled by President Joe Biden’s fellow Democrats.

Biden shifts infrastructure talks to new bipartisan group

Notable Snippet: President Joe Biden on Tuesday broke off talks on an infrastructure bill with a key Republican, instead reaching out to a bipartisan group, after one-on-one talks with Senator Shelley Capito were described as hitting a “brick wall.” Biden changed course after Capito, the leader of a group of six Senate Republicans handling the negotiations, offered $330 billion in new spending on infrastructure, far short of Biden’s reduced $1.7 trillion offer.

Biden supply chain ‘strike force’ to target China on trade

Notable Snippet: The United States will target China with a new “strike force” to combat unfair trade practices, the Biden administration said on Tuesday, as it rolled out findings of a review of access to critical products, from semiconductors to electric-vehicle batteries. The “supply chain trade strike force,” led by the U.S. trade representative, is looking for specific violations that contributed to a hollowing out of supply chains that could be addressed with tariffs or other remedies, including toward China, White House senior director for international economics and competitiveness Peter Harrell told reporters.

SENTIMENT

FX

STOCK INDICES

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