I was very eagerly awaiting this information today. Some of you may recall the F_E_D's newer RRP (Reverse Repo Facility) that banks have been using the VERY last day of either the month or more often, the quarter to make their financial condition appear healthier than it is by renting treasuries (high quality collateral) from the F_E_D for a SINGLE DAY, which is the last day of the quarter clearly for Window Dressing to fool investors in to thinking the banks are healthier than they are and to "fool" their regulators who happen to be the same people lending them these assets in the first place.
When the F_E_D first introduced the RRP facility it was under the auspices of helping as a policy tool when it comes time to hike interest rates, but it has been shown to be ANYTHING BUT.
Back in January before we really caught on to what was going on with the new facility, the usage was $140 bn dollars. We really noted the use of the F_E_D's RRP program , supposedly a tool for hiking rates when the time comes , at the end of April this year when it set the second highest usage ever on the last day of April , month end window dressing.
From there, it became evident that the banks are not in the financial condition they portray by borrowing collateral from the F_E_D for a single day, and the highest usage is always at quarter's end, specifically the very last day of the quarter.
So we started paying more attention and found that Q2's June 30th, saw the usage of the RRP facility go up to a new record usage of $340 billion dollars spread among 97 institutions, 1/3 of a trillion in collateral shortfalls and all of this to fool investors and regulators, except regulators are the same ones loaning the bank the assets for a single day.
Naturally with today being the last day of Q3, I was very interested in what would happen with the Reverse Repo facility as this is the last day for quarter end window dressing.
Not long ago the F_E_D CAPPED the usage of the RRP at $300 bn and on September 17th, they announced that on September 30th, unlike all other days they conduct reverse repos between 12:45 and 1:13, Sept. 30th (today) would be conducted at 8 a.m. - 8:30 a.m. EDT, the only thing special about today vs any other day they conduct the operation is today is the last day of the quarter with a facility that clearly was never meant to be an interest rate hiking tool, but a bank window dressing tool.
I was expecting the entire $300 bn allotment to be taken up as the previous quarter's bank window dressing set a new record, to many people's shock and disbelief, the usage of the Reverse Repurchase Facility today reached a new record high, above and beyond the F_E_D's own $300 bn cap of a stunning $407.167 BILLION dollars, creeping up on half a trillion in collateral shortfalls at the banks. In addition the normal 5 basis points for using the program came in today at a spread of between 5 bps to a negative -20 bps.
Tomorrow the assets will be repurchased by the F_E_D, the banks will have completed window dressing and appear to be in better shape than they are, if only for a day and the regulators will be fooled, who happen to be the F_E_D!
There are a lot of reasons I like FAZ, 3x short Financials, but I think you can safely add this to the list of net negatives for the banking sector.
Interestingly about 2 weeks ago
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Risk Management
Get the Most Out of Your Experience
- * Understanding the Head-Fake Move Part 1
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- * The Holy Grail of Investing and Trading-MUST READ-MUST UNDERSTAND IF YOU WANT TO EVER MAKE CONSISTENT MONEY IN THE MARKETS
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- * Placing Stops-What you should consider...
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3C Quick Start
Many of the charts you see here at WOWS are my proprietary indicator 3C which reveals underlying institutional money movements and often contradicts price. To understand the annotations made on charts, you must first understand that 3C has no numerical value, it is a pure divergence indicator. Positive divergences represent accumulation by smart money, negative divergences represent distribution by smart money and when 3C trades with price, that is trend confirmation.
The chart annotation system is simple; white arrows represent relative positive divergences, red arrows represent relative negative divergences and green arrows represent trend confirmation. When 3C is in a white or red box, that represents a leading positive or negative divergence, leading divergences are the most powerful.
We analyse 3C in multiple timeframes, the longer the timeframe the stronger the accumulation. 1-2 min timeframes represent intraday moves, a 5 min timeframe can represent a day or two and 15 min timeframes average trends of a swing trade nature. 30 and 60 min charts can move the market for a month or more and daily charts can be over a year.
You'll get use to seeing the charts and understanding how the multiple timeframe analysis works and works well.
Welcome to Wolf on Wall Street.
The trades featured here are meant to maximize returns with the least risk and highest probabilities. Unless otherwise mentioned, all trades are meant to be executed at market. I prefer long-term trending trades which perform well in rising markets, but really stand out in declining markets. However, we get occasional one day gifts 30,40,60% 1-day gains. I'd urge you to consider taking some or all off the table in such cases, the markets don't give gifts like that often or for very long. Most of the returns that make the system outperform so well come in short-entry trades. If you are opposed to short trades, this is not the system for you, unless you are ok with buying an inverse ETF. If you would like more information about the truth about shorting stocks, just email me.
Risk management. I recommend a specific and consistent risk management approach to all positions. In most cases we try for 2% risk money (2% of portfolio) unless such a position size exceeds 15-20% of overall portfolio in actual position size. Each trader is different and each has a different allowance of open trades. I like to keep the overall money in the trade around 10-15% of portfolio per position in case of gaps against you. Stops are generally executed at the end of day and I personally never place a stop order, all my stops are mental; remember, the middle man gets to see everyone's cards. When you are not in tune with the market or opportunities just aren't that spectacular, I take my risk per position down to 1% or even half a percent of portfolio value.
Each trader is different and must determine their own level of comfort with risk. I do have a channel stop which I provide to TeleChart/StockFinder users for automated stops, I appreciate you using my links to sign up if you do. The Trend Channel catches trends and works well as it automatically adjusts for each stock's volatility. Arbitrary exits based on nervousness about the markets WILL decrease the portfolio performance dramatically. This system will not ever get you in at market bottoms or tops. The recent 1 year performance against the Russell 2k buy and hold had the system beating it by 3:1. Ultimately it is up to you as to how you proceed, but I'm always available to help you determine what might work best for you.
Risk management. I recommend a specific and consistent risk management approach to all positions. In most cases we try for 2% risk money (2% of portfolio) unless such a position size exceeds 15-20% of overall portfolio in actual position size. Each trader is different and each has a different allowance of open trades. I like to keep the overall money in the trade around 10-15% of portfolio per position in case of gaps against you. Stops are generally executed at the end of day and I personally never place a stop order, all my stops are mental; remember, the middle man gets to see everyone's cards. When you are not in tune with the market or opportunities just aren't that spectacular, I take my risk per position down to 1% or even half a percent of portfolio value.
Each trader is different and must determine their own level of comfort with risk. I do have a channel stop which I provide to TeleChart/StockFinder users for automated stops, I appreciate you using my links to sign up if you do. The Trend Channel catches trends and works well as it automatically adjusts for each stock's volatility. Arbitrary exits based on nervousness about the markets WILL decrease the portfolio performance dramatically. This system will not ever get you in at market bottoms or tops. The recent 1 year performance against the Russell 2k buy and hold had the system beating it by 3:1. Ultimately it is up to you as to how you proceed, but I'm always available to help you determine what might work best for you.
I do use other scans and systems when market conditions warrant their use and may change strategy with market conditions.
The MOST IMPORTANT tool you have to bring you long term success is RISK MANAGEMENT. There are plenty of articles linked at Trade-Guild.net on Risk Management. We can be wrong 75% of the time and still outperform the market with solid, consistent risk management.
Position Sizing
The position sizes noted in the positions @ 2% risk of portfolio are based on a $20,000 portfolio-adjust as needed. Due to tight stops, there is the possibility, even probability that one position could take up the entire portfolio. You need to decide how many positions you want to trade and reduce the position size according to that. For instance, if you want to trade 5 positions in a $20,000 portfolio, no one position should be valued at more than $4,000-not risk money or 2% rule, but share price entry x shares.
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Futures Update BR-EXIT Edition - So the conventional wisdom couldn't have been more wrong. Those chasing risk and closing hedges couldn't be in a worse place right now. I would still remin...7 years ago
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