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Thread: Risk Off

  1. #1

    Risk Off

    There's going to be a partial liquidation event in the next several months.

    The Fed, and ECB, BoE, BoJ, PBoC, etc will print enough to cause rapid share and bond price recovery thereafter.

    But, first, they aren't nearly clever enough to actually prevent the selling.

    So, in this world, with these obscene valuations, there is money to be made.
    Last edited by r3volution 3.0; 12-26-2020 at 12:32 AM.



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  3. #2
    Sentiment is off the charts bullish right now. If you look at the 30 day average of the equity put/call, it is the lowest in history. The AAII sentiment survey which is small investors has been overly bullish for the last month. The NAAIM survey showed investment advisors were over 100% long for 4 weeks in a row which was a record. The market might go up from here given how bullish December history is but the odds are they would give back all of the gains. Dumb money confidence (which is defined as trend following speculators) biggest spread relative to smart money (defined as commercial hedgers) ever. Stocks are primed for a 4-10% correction just based on sentiment. There isn't really a good short setup here. There would be if stocks melted up over the next few weeks. It is really just a high risk spot. The last two months have been like 1999.

  4. #3
    Be interesting to see what the next four weeks bring . I'm feeling good . Let the good times roll. I'm all in on Land , Lead , nickel , silver , copper , bitcoin , gold and immune to wuhan . Sweet .

  5. #4
    Quote Originally Posted by Krugminator2 View Post
    Sentiment is off the charts bullish right now. If you look at the 30 day average of the equity put/call, it is the lowest in history. The AAII sentiment survey which is small investors has been overly bullish for the last month. The NAAIM survey showed investment advisors were over 100% long for 4 weeks in a row which was a record. The market might go up from here given how bullish December history is but the odds are they would give back all of the gains. Dumb money confidence (which is defined as trend following speculators) biggest spread relative to smart money (defined as commercial hedgers) ever. Stocks are primed for a 4-10% correction just based on sentiment. There isn't really a good short setup here. There would be if stocks melted up over the next few weeks. It is really just a high risk spot. The last two months have been like 1999.
    I wouldn't short US equities.

    Who knows where the madness of Tesla and so forth will go.

    But it is madness, and it will, I'm certain, end badly at least in real terns: and almost certainly nominally also, and soon.

    I wish there were puts for sale on BTC. That trash can't be shorted.

    Shorting that would be my second highest conviction play; if I could, I'd lever that up and ride it right back down.

    ...smacking a beanie babie in the face on the way down.
    Last edited by r3volution 3.0; 12-28-2020 at 11:50 PM. Reason: typo

  6. #5
    Quote Originally Posted by r3volution 3.0 View Post

    I wish there were puts for sale on BTC. That trash can't be shorted.
    GBTC is a stock that owns bitcoin and tracks the price of bitcoin close enough. That is shortable. It is pink sheets so no options.

    I would never own the underlying bitcoin. No reason not to use futures. Bitcoin futures are shortable. No options as far as I know.

  7. #6
    Quote Originally Posted by Krugminator2 View Post
    GBTC is a stock that owns bitcoin and tracks the price of bitcoin close enough. That is shortable. It is pink sheets so no options.

    I would never own the underlying bitcoin. No reason not to use futures. Bitcoin futures are shortable. No options as far as I know.

    You must spread some Reputation around before giving it to Krugminator2 again.


    Huh, I didn't know about those shorting possibilities.

    However, I don't want to short it in the traditional sense; I want puts, dirt cheap puts.

    Fair value is zero, or perhaps a tad above zero, given the black market demand for that kind of payment processing system.

    So I'd like some puts around that level, which would cost almost nothing if they existed.

    I suppose I could deal with Tesla instead, but I don't like betting against the federal government.

  8. #7
    Quote Originally Posted by r3volution 3.0 View Post

    You must spread some Reputation around before giving it to Krugminator2 again.


    Huh, I didn't know about those shorting possibilities.

    However, I don't want to short it in the traditional sense; I want puts, dirt cheap puts.

    Fair value is zero, or perhaps a tad above zero, given the black market demand for that kind of payment processing system.

    So I'd like some puts around that level, which would cost almost nothing if they existed.

    I suppose I could deal with Tesla instead, but I don't like betting against the federal government.
    Shorting overvalued growth stocks on valuation is impossible imo. I don't see how Tesla doesn't drop 70% from here but that doesn't mean it can't double before it happens. One way to short Tesla would be to wait for a high volume selloff where people aggressively liquidate. Then wait for two or three rally attempts that fail and then short. Even that is difficult but at least you can define risk that way and not step in front of a freight train.

    I wouldn't short bitcoin at all time highs unless it goes parabolic and only then for a one or two day trade as people liquidate. Runaway markets can go a lot longer that you think. Pull up a chart of ALPP. Was 5 cents a few weeks ago. Company is junk but that "obvious" short almost hit five bucks.
    Last edited by Krugminator2; 12-29-2020 at 10:10 PM.

  9. #8
    Quote Originally Posted by Krugminator2 View Post
    Shorting overvalued growth stocks on valuation is impossible imo. I don't see how Tesla doesn't drop 70% from here but that doesn't mean it can't double before it happens. One way to short Tesla would be to wait for a high volume selloff where people aggressively liquidate. Then wait for two or three rally attempts that fail and then short. Even that is difficult but at least you can define risk that way and not step in front of a freight train.

    I wouldn't short bitcoin at all time highs unless it goes parabolic and only then for a one or two day trade as people liquidate.
    The downside on btc is greater, as the underlying business model is almost literally nothing, and they're about to get a reality check from the SEC.

    Then again:

    Quote Originally Posted by you
    but that doesn't mean it can't double before it happens
    Right, so perhaps I'll just stick with the highest conviction trade.

    If btc or some derivative becomes optionable, let me know?



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  11. #9
    Dow finishes the yr at 30606 , Gold still cheap at 1899 , Silver also at 26 1/3 , Platinum closer to where it should have reasonably remained around all yr at 1061 , Palladium 2336 and stable , Copper about 3.52, nickel 7.54 , Aluminum and Lead about 90 cents .

  12. #10
    Quote Originally Posted by r3volution 3.0 View Post
    The downside on btc is greater, as the underlying business model is almost literally nothing, and they're about to get a reality check from the SEC.

    Then again:



    Right, so perhaps I'll just stick with the highest conviction trade.

    If btc or some derivative becomes optionable, let me know?
    I don't think you should short bubbles except for short term trades.

    The January Bitcoin futures contracts are at 37560 right now. Ideally it squeezes over 40000. Within the next few days you are going to have a blowout day where Bitcoin drops 5000+ dollars off of its peak. The way to time this is to go short the first red day vs the previous day and cover into the selling panic. If it somehow goes red on the day but goes back green and takes out the high of the day just cut the loss. Obviously even shorting 1 contract is pretty expensive. You can accomplish the same thing with GBTC. Closed at 43.93. Will have a nice 10%+ down move from its peak by Monday.

    That GBTC might be hard to borrow depending on the broker. Another way to do the same trade is to short MSTR. It junk 1990s dot com zombie company that put all their cash in Bitcoin and has gone up solely because they hold Bitcoin. Easier to borrow plus it is optionable. And there are the super junk bitcoin stocks like RIOT which isn't even a real company.
    Last edited by Krugminator2; 01-06-2021 at 08:16 PM.

  13. #11
    PPT steps in every day whenever there's the threat of a correction emerging. It's possible that a correction is allowed to occur around the inauguration but the overarching theme is that no corrections will occur unless they are -allowed- to occur. There is no market. There is only Treasury, Fed, Blackrock and Citadel.
    "Let it not be said that we did nothing."-Ron Paul

    "We have set them on the hobby-horse of an idea about the absorption of individuality by the symbolic unit of COLLECTIVISM. They have never yet and they never will have the sense to reflect that this hobby-horse is a manifest violation of the most important law of nature, which has established from the very creation of the world one unit unlike another and precisely for the purpose of instituting individuality."- A Quote From Some Old Book

  14. #12
    Quote Originally Posted by devil21 View Post
    PPT steps in every day whenever there's the threat of a correction emerging. It's possible that a correction is allowed to occur around the inauguration but the overarching theme is that no corrections will occur unless they are -allowed- to occur. There is no market. There is only Treasury, Fed, Blackrock and Citadel.
    look at the last twelve years , the amount of money printed and borrowed . if anyone underestimates the treasury and fed that should change minds .

  15. #13
    Bitcoin hanging on by a thread. Probably crashes tonight just to $#@! everyone who wants to short it during normal market hours.

  16. #14
    Quote Originally Posted by Krugminator2 View Post
    Bitcoin hanging on by a thread. Probably crashes tonight just to $#@! everyone who wants to short it during normal market hours.
    Hanging on to what?

  17. #15
    Quote Originally Posted by Krugminator2 View Post
    I don't think you should short bubbles except for short term trades.

    The January Bitcoin futures contracts are at 37560 right now. Ideally it squeezes over 40000. Within the next few days you are going to have a blowout day where Bitcoin drops 5000+ dollars off of its peak. The way to time this is to go short the first red day vs the previous day and cover into the selling panic. If it somehow goes red on the day but goes back green and takes out the high of the day just cut the loss. Obviously even shorting 1 contract is pretty expensive. You can accomplish the same thing with GBTC. Closed at 43.93. Will have a nice 10%+ down move from its peak by Monday.

    That GBTC might be hard to borrow depending on the broker. Another way to do the same trade is to short MSTR. It junk 1990s dot com zombie company that put all their cash in Bitcoin and has gone up solely because they hold Bitcoin. Easier to borrow plus it is optionable. And there are the super junk bitcoin stocks like RIOT which isn't even a real company.
    Thanks for the tip Krug, I'll need to look into those and see what kind of leverage they're into.

    ...I'd suspect it's bonkers.



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