[Transcript below is automatically generated and not 100% correct]
welcome to odds and ends i'm Dave Singh here with Rob Friesen so we're here to get our bearings on the week ahead and see how we can use the data and stock odds to help give us some trading edges and we just finished up this big volatile week we're poised for more macro themes in the week ahead tomorrow's the last trading days in February we have a few months starting we have fed speed earnings and it seems like the market has four big eyes this week invasion inflation indigestion that speak and insanity right the oil prices so it's a big week ahead and let's get rob's take on all this and good evening rock house has everything and what do you see that was that was pretty creative there the four eyes i gotta hand it to you that's pretty good so yeah it is uh very interesting um i'm very very sad for many people affected by this i mean you know uh loss of life um humanitarian crisis obviously uh just very very sad to see but um you know we're uh we're traders and we have to look at what is happening and and respond with you know positioning ourself in the you know areas that have the best uh proceeds and you know as as traders have done in the past you know some some people have made money off of uh different types of events um that you know enabled them to be able to then uh you know donate money to the red cross to you know certain organizations that can make a difference and help out so um so that's that's good that we can you know be proactive like that too with what we can take out of the market so let's uh try to equip everybody to do better and you know make a difference so um you know we are seeing as of the moment here the um dow futures are down 595 points or 1.75 percent and that puts it at an inside day for the range that we had on Friday so we're not back down to the lows um it did open down once the future started trading today and then it slid from that it's had a couple little spikes um with possible negotiations um that may take place in Belarus or whatever but you know at this point not much can be trusted because it's a very volatile situation obviously right um and the more embarrassed uh Putin gets you know with how badly this operation runs let's say um you know the more unstable you know the outcome could be so it's nothing that we can put a pin in and say we know exactly what the outcome is going to be we just we just don't but we know know these things that the market had an incredible Thursday and Friday so two two days stacked on top of each other that were quite remarkable um and probably uh two of the best uh top 10 trading days in the last 10 years um you know by the magnitude of what we saw and the opportunities that were there and it and and it is it is counterintuitive you know a lot of this stuff so we we try to we we try to communicate what we've learned from the markets over the last you know 20 30 years and i can say emphatically that the market factors in everything that it knows or can anticipate so this was not a surprise visit by Russia into the Ukraine it's been mounting for a long time and you don't position troops all around the border you know as generally as as only a scare tactic you know if you moving that type of hardware into and personnel into the vicinity you know was was it was likely that there was going to be an outcome that meant at least going into annex the east maybe more so so the thing is that the market was factoring the likelihood of an event occurring okay and then when the event occurs we gap down and we start to rally why well because the market already factored in and now is a massive you know buying opportunity for those that have been unloading along the way or shorting and want to cover or just you know had a wish list of things they wanted to buy and away they went and they went shopping at the open and then all through the day and so we had we had two days in a row that uh you know had some substantial rallies in in all the indices so um now whether it's you know in in Asia whether it's in Europe and North America the markets are pulling back from from that rally so the magnitude of that rally is is suspect in the sense of of how frail it can become after because you're going to have people that went along for the ride that might want to take profit people might have you know uh suspected the outcome was going to be better and now they're you know they're going to be surprised if it's not and so this pullback is kind of to be expected i think as well now an inside day makes it a bit trickier than buying a deep discount and seeing it come out of the hole those those markets while they still can be hard to trade you have a lot more information about signal to noise ratio right you can see clearly the activity in terms of higher highs and higher lows as you go through the day. When you're in an inside day if this is how it wants to play out all day Monday then it's going to be choppier and and harder to distinguish a clear direction and clear clear thing of what to do so we're really recommending that you be more diversified tomorrow this isn't the type of day like we had you know on Thursday or Friday where you can where you can just come in and say you know i'll just buy some great stocks and maybe i'll hedge with the SPY if necessary. It's it's not that type of day because you might have you might have negative alpha meaning that the stocks that you're in are just higher betas and higher volatility and the in this the hedge of the spy won't offset it if it starts to slide where if you were long and short both that would be more offsetting but when you have those deep discount days like we had then you know you can take that approach of um of even you know being one-sided if necessary and just holding on to your hedge uh loosely if you need to so it's it's it's different markets it's different dynamics um but what we're saying here is you know go to stock odds and and get your odds on the on the groups and try to be more more balanced like make sure you don't have too much exposure to one group to one group um and you know those groups could be the technology they could be oils they could be you know commodities uh in general gold and other metals and stuff too so okay so uh dow's down uh the s p is down 110 points or 2.52 percent nasdaq's down 382.5 or 2.7 so that's taking it on the chin pretty hard and the Russell is the worst at the moment um which also you know had had a pretty good showing the last two days too so it's down 61.4 or 3 percent at the moment um and it it opened when the futures opened the Russell futures they just opened and immediately dropped more severely than the others um and the volatility has written risen back to over 30 now on the vix so when you have high volatility you're going to have things swing both ways if the volatility starts to drop as we open tomorrow and the market's starting to build let's say then you want to target you know moving back to test to first of all to fill in the gap if we actually open with a gap so to fill in the gap that would be number one can we get a gap fill um and that gap fill puts us yeah pretty much right back to the close um so it's uh it's a good target so keep that in mind um but you'll have your indicators will be you know the vix will be smoothly selling down that's that means volatility is coming out of the market you know the people that control other people's money aren't buying puts as much there's some confidence coming back in that kind of thing so that's how to position yourself for tomorrow tomorrow is the last trading day of the month why don't you talk about some seasonality that you see for the last trading day of the month and we can compare that to the macro yeah so i just did a screen in stock odds for the seasonality almanac final trading day of the month in the past few years this is kind of a risk off day a lot of funds deleverage and de-levers their risk on that final day so it tends to be a down day just in general yeah yeah but particularly for the last day of February we're seeing symbols um like solar symbols in end phase arc fund type symbol so some kind of risk on force for longs and for shorts things like biotech ETFs financials and oils typically but um in terms of sectors that are going to outperform or underperform based on the odds IWM is expected to underperform the spider that's in sync with what we're seeing right now in the futures also financials energy and materials are the ones that are typically underperforming the spider and the ones that are outperforming the spider typically are the QQQ XLK smh and ARKK so um some of your higher beta tech stuff typically would outperform on that relative to the spider on the final day so it's a little bit mixed but um for in terms of oil i mean typically you would expect it to under perform relative to the spider but we have this major macro storm right and with it up like four or five percent pre-market now it seems a bit tricky i mean if it opens up five percent is the premium built in and it cannot retrace or do we just want to be long only on oil so oil seems to be a trickier one you're either going to really make it break your um your day's uh p l based on that so how would you play oil for tomorrow well my my long range [Music] assumption would be that we're going to be pushing back towards the 150 a barrel so 147 and changes is kind of where oil hit back in i believe it was 2014 i could be wrong but maybe maybe i got my ears off but anyway it you know the last sort of super spike that we had of oil um and then from there it really dropped massively down but um i'm i'm thinking that that is definitely possible and and it's not it's not just war related it's because the futures are still in consolidation um and that puts an upside um potentially on that for this next contract as well as supply chain stuff and we don't know you know whether the opec countries will sort of step up to you know help alleviate this problem i mean you know as oil is is pricier it does put more revenue into Russia's coffers right but at the same time countries you know um haven't moved to completely sanction that either so um it's it's possible i mean i just see i see that it wouldn't take much more uh you know bad things to happen to to you know create this super cycle um so so that that being said um it you know because oil had such a massive rally over the last uh six months to seven months or so it um you know it it's normal that there's some profit taking now that we're in the event so that same rule that i mentioned at the beginning of the program is still true and that is the market is factoring in what was it factoring in supply chain problems you know demand increasing with the reopening economy you know the fact that you know the environmental talks you know really was no outcome that was uh you know reducing the consumption of oil it's like yeah you know we we know we got to get all green and everything but you know we're not ready to do it yet nobody's you know really stepping up uh so you put all those things together and i think you just have an environment where oil certainly could you know have a correction pull back a bit and then get back on its way to continue up now with the war going on obviously you're not seeing a much of a correction it's been down a couple days right but i don't think that that's permanent i think it's uh just a little bit of a blip just because of how much it moved and then the crude futures now you know are up from where they were on Friday's close right so we have moved up but we're not making any you know new high so it'll have to get back up over the 100 a barrel firmly and then continue to build i see a hundred and you know 112 115 very possible just within the next few weeks um and um possibly the worst case scenario it could go to back to 147. yeah that was back in 2008 July 20th oh was that when it was okay um yeah i just remember the price it got up there um yeah and then it fell it fell from from that high all the way down to something like 39 i think if i remember correctly like 39 something a barrel or 37 even i don't know or minus 80 right well no that was that was in 2020 right so minus i don't even think the minus shows on a chart does it really no yeah nobody's equipped for those minuses on commodities imagine imagine that all the commodities the world were minus for and then you could buy some that would be amazing uh anyway um so so this this puts a a macro opposition to the seasonality of that XLE being down on the last day of the month right um as of as we stand right now it's up from Friday's close but but it could still be down open to close so if if you're looking at it from a close to closed perspective it may fail but if you're looking at it from an open to close we may actually open high on xle tomorrow and pull back all day if for example you know there's progressive talks that mean that maybe there's some hope of um you know of ending this thing sooner than later right okay very good now we need to look at all of the commodity space to see what is really being affected here so currencies the us dollar is up right so what does that benefit and that would be less likely to roll over hard on you um you know when usually when the dollar's up it you know it doesn't it doesn't change direction that quickly it's not as aggressive as something like um you know if you if you went long gld and it it decided to be a risk on day they would probably sell the gold down pretty quickly right but the us dollar won't won't be that impacted um let's just see here we've got crude is up brent is uh you know brent is up uh west Texas is up gasoline heating oil natural gas um gold is up um we're back to 1909 1909 on that um silver but here's the thing we have not we have not beaten on any of these things that i've mentioned the high that was set um a couple days ago so that's still in place um [Music] see wheat's up um and and wheat is like Russia is a big supplier of wheat right so wheat's up um what else are we seeing here yeah gold was up to like 1935 a couple days ago and it's only 1909 right now yeah so i mean it's up from Friday right so that's the thing that people are going to see is it's up from Friday but you have to look at context where was it in this last week you know what are the highs that were set and where we are so i'm seeing a lot of inside day or inside the last five days you know i'm not seeing like brand new highs across the board on any of these things that are sort of defensive right and we're not seeing new lows on the markets so i think i think it's it's a just treat it i think come in tomorrow and treat it like that inside day try to be diversified in your lungs and your shorts um you know just monitor your exposure to technology you don't want to be too one-sided your old you know gold and silver and basic materials in general you don't want to be too one-sided um [Music] you know i don't know what's what's the future's doing on um treasuries and stuff here what's going on there bonds um so you know we've we've got another thing with Powell speaking this week um we've got some some we're waiting for some clarity on what may be happening for the march meeting and some some guidance there so um so there is some fed banter and people have said that the the rally that we just had was related to the fact that with the war the fed would probably be less hawkish and more dovish i don't think that statement is entirely true i think the reason is that we still have a massive inflation problem and it's only gotten worse with all the events that are going on and they do have to deal with that and i think the market rallied partly because of that expectation but obviously partly because of what i said at the beginning of this podcast was the market had already factored in uh things related to the war right so i think it's two-prong and i think that the indication of that is the war is still going on we're pulling back on the futures right so would we should we not still be rallying if the if the argument was only about interest rates we should still be rallying right now we should be rallying into Monday we should have a big up day on Monday but that's not the i don't think that's the case we're pulling back now you know and the market is so it's it's not all about interest rates it's about the macros globally and about the fed's posturing and what they're going to do so well we have to hold both concepts and we have to deal with them and this week on wednesday thursday we do have some more uh fed uh speak so um you know we'll have to see what we can get out of that so anyway um just remember it's not just the last day of the month tomorrow um we then from from where things close we have the turn of the month effect into the first day of the new month so on your seasonality calendars get orientated with the first day of march and what to expect there because you'll need to take that into consideration for anything you might want to swing trade or you know pairs that you might want to create or you know just uh you know doing your basket trading going into uh tuesday morning as well right okay very good anything else no well i i mean i think today that the term nuclear really spooked the market for getting his nuclear deterrent to high alert i mean putin i think that's what did it for today otherwise i think we might have just continued rallying in with um knowing the invasion that is going on and there's possibilities of talks that he's going to keep playing and manipulating positioning but i think that keyword nuclear deterrent on high alert that kind of really spooked everyone today well yeah i mean there's there's going to be the propaganda playbook you know going on all the time too right i mean it's it's all start you know everything's based on lies it's just so much of this stuff and you know if you're going to be headline driven in your trading it's going to be you know kind of a crazy crazy road to walk so we have a better plan with stock odds and that is long and short trading and you get you get to decide that's where discretion can come in is how much exposure you want to a particular sector or industry and if you don't want one-sided exposure then you can be long and short within the group so that's the beautiful thing that we have i mean none of this sort of phases us in terms of what's going on in the world really but we can optimize our trading by doing some of the things that we mentioned here which is like on thursday and friday those were good days to you know take a little bit more risk because of the deep discount and you know get filled on some of these longs that you wanted and then decide to hedge with either the diamonds or the spy or and if i see if it's a really sort of aggressive risk on type of day and i originally hedged with the spy i might even take a bit of that off and put some into the diamonds because the diamonds you know generally tend to um not perform as well if they're going after things like the cues and the russell and stuff like that so you you get to you know you get to decide how much exposure you want or you can kind of strip it out almost all together if you are long and short you know electrical utilities or if you're long and short some reits or if you're long and short some money center banks you know you you are taking a bit of the market out or a lot of the market out and you're also taking some of the macro out you're not going to be as impacted if you're sort of get it wrong i mean it's going to it's going to be reducing the variance on your trading account tremendously okay all right good luck all right take care.
