Various thoughts

@Alyosha745 on X

“I don’t want to go through things that make me stronger but don’t kill me anymore.”

Nine hundred words today, a bit lnger than usual.

The FOMC begins a 2 day meeting on Tuesday. Wednesday’s data includes ADP, a survey often wildly divergent from NFP. However, ADP has been well correlated with the trend in NFP job growth for 8 months (see chart below). Barrick reports on Wednesday. Following Newmont’s blowout last week, earnings from the 2nd largest producer of gold should interesting. NFP Friday.

Last month Powell was out of character at the press conference. He actually smiled, once, I think. However, given the pause on cuts and reprobative inflation data, Powell could easily say something sparky on Wednesday. He does get testy when pressed.

In the markets, buckle up for a boring 2 days.

Yen volatility will accelerate if the BOJ continues to dither, meaning a declarative policy of measurable intervention is essential to break the fever. Hints and threats just make things worse, imo. Var on the wrong side of the carry is insane. Sooner or later, it will be low tide for the naked swimmers. At a point that dynamic will resurface in gold on the SHFE again.

On the CBOT, open interest is making record highs in bonds and 2s. Bitcoin’s tepid response to the DTCC saying it will not allocate any collateral value to ETFs smacks of a market that is either short or sold out. Copper’s vertical surge of COT length is relentless. The last time longs piled in to copper at this pace in 2021, prices doubled. Oil is a narrative still looking for a market.

In stocks, I saw this on Friday….

Enovix (ENVX@EnovixBatteries ) is one of the most heavily shorted listed equities today according to the DTCC via Bloomberg, and exchange data released 2 weeks in arrears on April 15. Fifteen days to cover. ooof!

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.

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…The stock settled up 10%. Pretty rare stuff.

Before you start clicking on the left hand side, allow me to opine that nothing is worse than being on the wrong side of a monster position that is winning. I refer you to the chart above. However, someone is buying vol and shares in this little obscure name…RILY squeezed the Cahodes gang last week, bigly. Sort of makes you go hmmm. In any case, ENVX went out bid and calls went out vertically bid.

Lessons…

In August 1986 I was filling orders in WTI for a guy who became one of the most successful traders in our time. He called me out of the pit before the opening and he said, “JJ I don’t want Sept to open above 11.05” (I’m writing from memory). You’ve got as much volume as you need. Just don’t let it trade through you.

The market wanted to go higher. In the pre-opening guys were already showing 10 bid. I waved them off and showed an 04 offer. J Aron showed me size buying from across the ring, but we couldn’t state size or indicate a trade before the bell. Of course we had looks that said the same thing, body language, faces. I gave him the wave meaning, I will fill you100%. At least 10 locals showed me 04 bid and paper brokers were calling my name. JJ! JJ!

On the bell Aron (Ruzika I think) lifted me on 1900 and I sold a mixed 1000 to locals and paper. I traded with so many guys I stopped writing and sent 2 clerks around the pit checking names. As the rest of the months opened, the locals put their legs down. They oversold the backs expecting me to be there in size. And I was, and I filled them.

After a few minutes the market sagged for the rest of the day but not much. Towards the close Sept traded back to the opening lows. I was thinking this thing is going to make new highs. My “client”…called me out of the pit and said sell 3 thousand from now to bell (about 3 minutes). Start now. It went without saying he had size working in heat and gas. We went into the close on the low of the day. I slaughtered it.

Crude came in 2 dollars higher the next morning. Yamani did something or said something, whatever…. some kind of a deal was made overnight.

My vibe…

Rather than thinking of ENVX as a trading idea, think of it like a Komodo Dragon eating a baby goat. The terrifying submission of life in nature to power. Nietzsche's maxim as a meme at the top of this note. But… Tesla survived. And Musk is a threat to the global order now so, it can be done. Fwiw I’ve traded a few of these and the baby goat usually loses. The key is hit and run.

On a brighter note, WTI was only 3 years old in the summer of 1986. There was no BP, or Goldman, no GSCI. Just us and Leon Hess, Commodity Corp. Louis was still at Lehman. Jones was over at 120 Broadway trading in a broom closet. Mazzella was a junior silver trader working for JPM… We all learned, or better said accepted, that just because a trade is big doesn’t make it good.

**always a taker of ideas and views. good luck today.

JJ

Charts and data CQG and Bloomberg

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