Trade Ideas (12/4/2020)
Beyond The Horizon
by Event Horizon Capital
3y ago
This note will take a bit of a departure from those of the past, as I have some ideas I’d like to share for actively managed trades. Much of 2020 has been unorthodox, and rather than riding long-term macro trades into the unknown, some of my focus has shifted to actively managed trades using a few modified indicators (from their past iterations). Let’s start with a few long ideas: NVIDIA Corporation (NVDA) - Long First up is NVIDIA Corporation (NVDA). Today marked a buy signal coming out of recent contraction. From expansion comes contraction and signals appear to show this one more likely to ..read more
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The Real Estate Motherload
Beyond The Horizon
by Event Horizon Capital
4y ago
First and foremost, a Happy Mother’s Day to all the moms out there! Now let’s get to it… It pays dividends (not just literally) to be contrarian at times. One opportunity that seems to present itself often for winning trades is via Barron’s magazine. Now that’s not to say this is a “signal” per se, but sometimes the timing is just incredible. Magazine covers are typically going to dramatize the peak of an event as that is the most newsworthy time. Yet, they also tend to exemplify very crowded opinions and positions. Here is the upcoming May 11th cover story: While I certainly hope real estate ..read more
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Frenemies
Beyond The Horizon
by Event Horizon Capital
4y ago
The friendly affair between the U.S. and China seems to have soured quicker than it was resolved (which it never truly was). Not only did I foreshadow part of this when I went long the USD/CNH currency pair on March 18, but I also (re)tweeted a few items on this development over the past several weeks, so this weekend’s news flow around Sino-American diplomacy was not a surprise. A quick rundown of the current relationship: 1) U.S.-China trade deal in disarray - the agreed-upon terms don’t make sense in the current post-COVID landscape. This is due to the curtailment of trade overall, as well ..read more
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Sky Rockets In Flight
Beyond The Horizon
by Event Horizon Capital
4y ago
The only possible way to describe the past two months of market action is a quote from Vladimir Lenin: There are decades where nothing happens, and there are weeks where decades happen. Nothing else quite encapsulates the voluminous oddities that have taken place. This week we saw oil trade negative, but the fallout from this is likely to be much greater. One need look no further than today’s news regarding Bank of China, which postulated that retail investors may have lost $1.3b trading a structured crude oil product. We also saw an 8-K from the United States Oil Fund (USO) seemingly everyd ..read more
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Black Gold Monday
Beyond The Horizon
by Event Horizon Capital
4y ago
The May delivery futures contract absolutely crashed today. There will be some major fallout, and I hope that none of you are in this camp: While it may seem astute to buy an ETF that tracks West Texas Intermediate (WTI) crude oil as prices closed below -$37.00, this is not the way to do it. First off, the ETF already rolled holdings to the June expiry, meaning they did not have exposure to the May contract today. A further example on why this is not the right play: when oil prices rocketed 78% in 2009, USO went up a lousy 14%. Lastly, I have to add that I don’t think the pain is over for cru ..read more
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Komorebi
Beyond The Horizon
by Event Horizon Capital
4y ago
It’s a term that I came across a few years ago in the Japanese language that didn’t quite have an American (English) equivalent. Its meaning essentially pictured below: When I started Beyond The Horizon, this sentiment embodied its intent. Its purpose was to shine a light to what lay ahead over the horizon; or in this case, when you look beyond the trees and forest. Today we are seeing the U.S. fiscal and monetary authorities attempt their Japanification of America. It has been foreshadowed for some time, but I believe it has quickly gone beyond what many expected. The Fed is a step short of ..read more
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This Is Not The Bunny Slope
Beyond The Horizon
by Event Horizon Capital
4y ago
Today’s post will be a shortened update as I am trying to spend the day with the family. However, I still wanted to share a few interesting items that I am seeing from a macro perspective. The first is a chart from Marin Katusa of Katusa Research, a commodities investing expert. This chart shows that commodities are extremely cheap relative to equities. When this measure has hit extremes in the past, it has tended to revert over a longer-term period. What this likely means is that we are headed for a pro-cyclical period for commodities. Or, at the very least, they will outperform equities. Se ..read more
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Bear Market Rally
Beyond The Horizon
by Event Horizon Capital
4y ago
The news cycle has been focused around the recent bounce in equities, from a low $2174 on S&P 500 E-mini futures to present state $2550. That’s a significant bounce, but beware headlines such as this: “The Dow’s 21% surge in 3 days puts it back in a bull market.” While I am not sure there is a minimum time requirement for a bull or bear market, I am confident that three days does not make one such. I am of the opinion that this was an archetype bear market rally, and we are ultimately headed lower. The COVID-19 situation has not improved, and if anything there is still much more tail risk ..read more
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From Russia With Love
Beyond The Horizon
by Event Horizon Capital
4y ago
For three weeks now, we’ve been living in a cheap crude world. Not in the way of unrefined human behavior, but in the way that Brent turned the year at $69.07 and has since fallen to $28.21. In January, I called for oil to decline before re-accelerating to the upside. By no means did I anticipate this as the first leg! This has had a far-reaching impact across credit markets, FX, equities, and just about anything else that matters. This all started with OPEC pushing for a production cut, which Russia wouldn’t agree to. In response, the Saudis ramped up output sending oil prices into a nosedive ..read more
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Cheat Code: Down, Up, Down, Triangle
Beyond The Horizon
by Event Horizon Capital
4y ago
This will be brief, as I don’t typically post much mid-week due to trading and family. Yet, with today’s interesting moves, I felt it appropriate to chime in. As you probably saw, markets went limit down overnight before the Fed announced it would buy exchange-traded funds (ETFs) linked to the corporate bond market (i.e. LQD). This, in addition to a few other liquidity provisions, led that limit down to turn green for a portion of the day before finally closing back in the red. Due to this additional “buyer” in the corporate bond ETF market, I chose to exit the $121 put option (June 19 expiry ..read more
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