Sometimes we have to take what the market gives. One of the biggest signals, aside from the obviously large move this morning is the AUDJPY currency exchange. It isn't always the case, like with all market internals we have to evaluate it and interpret it and it could be wrong, but I'm going to use this time right now to de-risk my portfolio.
I'm not shorting the market, I held myself back from selling futures contracts yesterday because I don't like trying to time one off trades. Even if I'm right, a one off trade won't move the financial needle.
So my decision to liquidate puts today is based mostly on this chart:
This is widely used as an indicator of the "Carry Trade" - where big money borrows to invest in the US stock market or pays back. When it pays back the currency exchange falls and that signals money coming out of our markets to pay it back. Here in July, this is a big dip to pay it back.
Does it mean the markets are going to tank? Not necessarily, but it is a strong indicator that liquidity is coming out, buying will be slow and selling pressure will be high.
I think this has the potential to overshadow the earnings week where even if a company reports well given the expectations, the move will be under large sell pressure and will be muted even if positive.
Here are the positions I liquidated, I will update the sheet later today. I've liquidated all outstanding short put options. So I'm not liquidating the portfolio, but merely taking off risk. I've liquidated the puts whether they were in profit or loss, and the spreadsheet will be updated to show that.
HOOD
I've also liquidated my HOOD positions and will update the daily put challenge in the video later this week.
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The content of this newsletter is provided for informational purposes only and is not intended as financial advice, investment recommendation, or an endorsement of any particular security, strategy, or investment product.