metals,oil, and everything else
(Various thoughts)
May 3…)
When you come to a fork in the road…
In the news
Buffet convenes BRK’s 60th shareholder meeting in Omaha on Saturday. Among the ancient leaders of America, scared by politics and life, Buffet’s reputation at 93 is still pristine. It would be fair to say he is the only plutocrat in our time with a messianic adoration equal to Donald John Trump. In stocks, AAPL brought the bazooka to a ‘may-day’ earnings report or better said in French, m’aider. The Yen thing is done and dusted, imo. Always leave a party when you’re having fun…The UCLA campus looks like Yasgur’s Farm after Woodstock.
In the markets
Hourly data in Yen tells me three things. A short JPY (long CME futures) capitulated from April 26 to April 28. The BOJ was ready for it. Around midnight April 28/29 the BOJ intervened aggressively. Then the market ripped for a few hours and sagged but that looks like backwash, not another wave. The BOJ read that as a green light and intervened again right after Powell concluded the press conference.
The dollar was soft all day on Wednesday, dumped at 3 PM and rallied hard Wednesday night. For most of the session Thursday it was twaping the flotsam and jetsam.
Gold
The reason open interest in gold is always unchanged is because the long is not selling. By definition, if one side of open Interest doesn’t get out, the only way OI can change is if new OI comes in. OI cannot go down if one side does nothing. In this form the weak side of the market (shorts in this case) must trade with other shorts or create an auction to attract new longs.
OI can do many things. Rising OI, rising volume and rising prices, is a simple declarative statement. Up. Falling OI and declining volume correlated with direction implies weak liquidation. Up or down. However, OI that does not change over time especially in a market that has a driving narrative, implies an anchored position and is a tell which side is the strong side of the market.
Study this chart, please: 95% of the 522,500 lots of OI came in at or below $2188 on or before March 7. OI has not moved at all in 60 days.
On Thursday April 29 I wrote this:
[Tipranks.com says], “Approximately 24.49% of the company's stock is owned by Institutional Investors, 35.91% is owned by Insiders (my emphasis) and 39.60% is owned by Public Companies and Individual Investors.”
“Bloomberg’s cob 4/26 data (noted above) indicates the float at 135.9 million shares. I view it differently. The combined float 135.9 mm+ and short interest 41.8 mm is 177.4 mm shares. Short sellers have simply diluted the float by flooding the market with borrowed shares in the same way a secondary offering of 41 mm might depress share prices. Very effective.”
I continued: “On Friday BBG’s May 17 $6.50 C implied vol settled at 145% (IVM, middle right column, second from the bottom). Schwab’s Black Scholes marked vol in the May 3 $6.50 C at 181%. wtf (my empahsis)…The stock settled up 10%. Pretty rare stuff.”
ENVX cob May 2.
My vibe
One of the things that made the pits teachable was we were not geniuses. We were part of a guild. Runner to clerk, clerk to pit. It was like high school. I hired my best clerk from behind the counter at the Essex diner. The key to good trading was simply a willingness to participate.
**always a taker of ideas and views.
Happy Friday and good luck today.
JJ
Charts and data CQG and Bloomberg
Various thoughts is not a registered investment advisor, and comments are for informational use only. Any mention of a particular security, index, derivative, or other instrument is NOT a recommendation to buy, sell, or hold that security, index, derivative, or any other instrument. Various thoughts makes no representations as to the accuracy of data or any attributions.