D&D Note (2.6.2018) ~ The New Computer Driven Market ~

D&D Note (2.6.2018) ~ The New Computer Driven Market ~

Welcome to the future where computers lead our markets up and down. We’ve seen extreme volatility in the last few trading sessions. What happened?

On Friday we got a good jobs number with rising wages. That good news became bad news when investors then started fearing the rise in wages could lead to inflation. That lead to the 10YR rising to 2.86% which spoked investors that the FED was behind the curve on interest rates. That then started a selloff which carried into Monday.

On Monday the market fought back from the opening low but then started drifting back down. Then suddenly we saw a huge computer algorithm driven flash crash lasting only 10 minutes from peak to trough back to peak creating a V. Then we traded back down towards the lows of the flash crash before closing.

Then in after-hours we saw the culprits of the flash crash including the ETN XIV (which is an Electronically Traded Note that is short volatility) fall 80%. From that we learned that due to the huge sudden spike in the VIX (which gauges volatility) the ETN realized they would not be able to actually cover the trade and was forced to set the computers free to sell to raise cash due to the flip of the VIX. Thats why we saw the huge prints sending the market down so fast.

Then overnight the pain spread across the world and due to these levered ETN’s we had a huge artificial down futures leading to a big down opening Today. The market climbed straight up to even right off the open before swinging back and forth between gains and losses as we tried to find a bottom. Then in afternoon trading we saw a nice rally into the close lifting all the indexes.

Now…. we are certainly not out of the woods. Most likely in the coming days we will retest the recent lows to create a “double bottom” before then resuming the bull market march onwards and upwards.

Today D&D bought DIS and ITW on the open adding to both of those positions of ours.

Pot Stocks lead the day for us seeing 23%, 19%, 18%, and 17% gains on the day leading our portfolio to recoup all of our losses suffered on Friday and Monday.

Its best to take a good look at your portfolio and see if there are any weeds you can pull to raise cash ahead of the next time we retest the lows. Just don’t pull up your blooming flowers along with your weeds.

D&D movers:

– EMHTF up 23.04%

– IMLFF up 19.54%

– TWMJF up 18.88%

– WNS down -0.31%

Indexes

– DOW up 2.33%

– NASDAQ up 2.13%

– S&P up 1.74%

Sector Movers:

– Technology up 2.82%

– Materials up 2.81%

– Consumer Discretionary up 2.49%

– Utilities down -1.51%

– Real Estate down -0.15%

Notes

– US 2-YR 2.109% (up 0.024)

– US 10-YR 2.805 (up 0.011)

– US 30-YR 3.068% (up 0.001)

Volatility

– VIX 29.98 (down -19.67%)

Crypto (1:00 PST)

– BTC $7,492.50

– ETH $756.40

– BCH $941.06

– LTC $136.80

Metals

– Gold $1,325.90 (down -0.80%)

– Silver $16.575 (down -0.58%)

– Copper $3.213 (down -0.25%)

Energy

– Oil $63.63 (down -0.81%)

– Brent $67.05 (down -0.84%)

– Nat Gas $2.764 (up 0.62%)