Recession Concerns I Jonathan Rose I Active Day Trader I Trading Interest Rates

 Recession Concerns I Jonathan Rose I Active Day Trader I Trading Interest Rates

- Hey members, good morning, it's Jonathan. I didn't put out the futures week ahead last night. I got caught up doing kids stuff, did some baseball game, so I wanted to get something out for you early in the morning. I want to start with the video I put out 10 days ago. Listen to the video. Go back and see what you would have done differently. The reason I'm replaying this video is because nothing has changed. We are right. We got this market. We have good feel right now so let's trust it going forward. So watch the video, here's that recording from June 15th. I think there's a darn easy opportunity yesterday if you look at the S&Ps. And again, this market is going to get hurt okay. When I start having an opinion like this and I'll be a little arrogant right now, I'm pretty darn good, okay.

Yesterday's high of the S&P, 2794. The day before, 2796. The day before, 2794. The day before, 2794. The exact same high, maybe not to the tip but with a point or within two points. That is really telling. And now the high of today is going to be 2779, the low of yesterday, 2781, the low of the previous day, 2778 or 79 so it makes sense. Get out of the way right now. We want to take our entire portfolio and make sure that the overall deltas in that portfolio are short. So that mean if we break it down to this simple common denominator, if your long a hundred shares of Microsoft, and your long 10 ten puts in Apple that's in the money, your portfolio is probably going to be short deltas because those 10 puts are going to be equivalent to a thousand shares short Apple and your only long a hundred shares of Microsoft. It doesn't mean cover the Microsoft, that means, if you look at your portfolio as one position in that example, your short deltas. Okay, now that you've had a chance to watch that, notice the confidence, notice the belief, that's having an opinion sticking with that opinion. S&Ps in front of you, I have the nightly session.

We're down to 2695. Let me put it on a daily. Again, the reason for this bearishness is because of the yield curve. The yield curve is flattening, very very concerning. When it's flattened in the past, we got into a recession. (clicking) Now again, just to avoid the emails, it doesn't mean we're going into recession, but as traders what that means is the likelihood of going into recession when the yield curve's flattening is a higher probability than the likelihood of going into recession when the yield curve is steepening, simple as that.

So use that information and protect your darn portfolio. S&Ps, we nailed this right? Now we get down to the 100-period moving average. We're going to gap under there, because even though we're trading here now, the market's low yesterday was 2702 and it looks like we're going to open at 2696, that's going to give us a gap in the daily under the 100-period moving average. Okay, technicians you might look at this as a little head and shoulders, fine, I'd like it a little bit steeper but nevertheless, the new line in the sand, the only number that matters. Trust me on this, we nailed it 10 days ago, let's continue. The only number that matters right now is 2700. That's our line in the sand. Below 2700 we are obnoxiously bearish. We will go and test this 2667, that'll become the new line in the sand.

What's this low? 2675. So this might go up higher, this stays the same, so maybe that'll be like 2772, that we'll get to, but right now the only number that matters is 2700. Above, we'll rally a little bit, below, use that number as resistance. Very, very bearish, continually bearish. Let the market guide you. No reason to speculate on the long side right now. Don't sit there and wait to find bottoms. The market is heavy, we are selling off protector portfolio. As we sell off, the bond market's very, very challenging, right? That's why we want to trade balance.

Here's the ZB, I'm long TLT puts, I'm short ZB futures, they stink. But I'm also short Nasdaq futures, I'm long Intel from the week ahead just like we discussed. The reason we're in that Intel trade. Close to an inverted yield curve, okay. These for a dollar, yesterday they were closing, they were trading at 3.50, today I bet they trade up to $5. Hold on to those trades, don't give up your short exposure. Ask yourself what happens if the market's down 10% today. Well the ZB's going to rally right? The ZB's going to go way up here. If I look at bond futures, it's actually steepening a little bit this week.

So this is crazy, it's steepening, these are too fricking cheap. The BUB right now is wrong, the BUB is too cheap. I know the advanced bottom room, you got your longs and BUBs, I would strongly consider cost averaging and adding some BUBs because these are wrong. The yield curve, the back end of the yield curve is strengthening. This is the difference between 10s and ultrabond. Within this trade, these are the sum, the two parts, right? So the sum of the NAB, plus the BUB equals the NULL.

Bond Bootcamp members, you guys know what I'm talking about. If we really look what this is, it's going to be the difference between seven-year and 30-year rates. So you can just look at the 30-year rate, look at the seven-year rate, 30 minus seven, that's what this is. This is seven-year to 18-year and this 18-year to 30-year. So seven to 18-year, 18-year, 30-year equals seven to 30-year. Look how strong this has gotten. Look how strong seven to 18 is. You're telling me the 18 to 30 is just going to trade in a complete opposite direction because it's Thursday in the summer? No fricking way, not going to happen.

If you buy the BUB right here, your risk is this, turn to, goes down. But that's not what's happening now. If you trade the market for what's happening now, these are wrong. I like getting on the BUB, guys. I like staying long. Volatility, staying long those puts in Intel. Find ways to hedge your portfolio, in case the market continues to go down. Which I suspect it does. We're right here. If you didn't believe me the first time around, and now you're sitting there looking for support, you're going to get yourself into some trouble. Give me the benefit of the doubt guys. We are dead right on this, okay? Any question, support at Active Day Trader.

Trading is about having an opinion and then being able to confidently express that opinion in the market. Once you're in that trade, you got to believe. It's like playing sports. You don't step out on the field until you're ready to play. If you step out on any ball field, not ready to play, or scared, you're going to get hurt. Trading is no different.

Be confident, we have a thesis, stick to the thesis. I'm here for any questions, guys. Jonathan, Active Day Trader. .

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