August was another month of market churn. The US indices hit new all time highs earlier in the month, driven by relief more than anything else, and then proceeded to drift sideways inside a very tight range for the remainder of the month. What’s on everybody’s mind? The FOMC. Those jokers like to say how transparent they are but I have to say they are anything but. The official committee has been stringing the market along for years and along the way the individual members like to add in their own comments and opinions which most of the time are contradictory in some way to the official stance. If there is one thing to blame for market volatility over the past 18 months it is the FOMC. The biggest, best most awesome thing to happen this month is the birth of my daughter, weird saying that, who is healthy and well.
Total Cost Of Trading = $10,000
Total Return On Investment = $10,175
Net Return on Investment = 1.75%
There were 5 weeks in August which would ordinarily result in 25 weekly tips. This month however I skipped a week when my kid was born so there are only 20 tips, oh well. Of those, I can say I was profitable, but of those I only won 11. That is barely enough to break even, it gives a 55% win rate, but at least provided enough dough to buy a bunch of diapers. The total cost of trading was $10,000, my total return on trades (not counting rebates for lost trades) was $10,175 giving me a profit of $175 or 1.75%. Thankfully the summer season has ended and market volume will return, that will help with some of the volatility, now if only the FOMC would quit screwing around with rate hike expectations we could get down to some really serious trading. Until then I have to say I am cautious and wary of any large moves.
What Happened In August?
It was more or less a quiet month. Economic data was firm, not strong or weak, but did not really push the Fed into hiking. It did push them into making a whole lot of new statements, saying the same old things in different ways, so that the governors could get on TV. Yay for them. Earnings season came to a close, better than expected but not as much better than expected as the four year averages lead us to expect. Oil prices tried to rebound but that was cut short, supply is still king in that market, and just about all assets were range bound. Moves were driven by day to day news, were weak and often reversed the very next day. Frustrating to say the least.
Week One August 1st
This was a big data week, following weak GDP data and wishy washy FOMC outlook. Jobs came in a little light, earnings were still coming in, and the BOJ did not follow through on expectations. Forex markets were rocked, gold prices fell hard and I ended up losing 3 of my 5 trades. I only won the SPX, skill, and the on the USD/JPY which I think was pure luck.
Week Two August 8th
My daughter is born! 6 pounds 9 ounces, 20 inches long and perfect in every way.
Week Three August 15th
The summer melt-up to new highs stalls out. Earnings season is largely over at this point, there is a lull in data releases and we are still a week or so away from the next FOMC meeting. I did better this week, not great, but better with 3/5 wins. I lost out on the SPX and Gold, largely due to Fed Speak, grrrr I wish those guys would shut up.
Week Four August 22nd
This is the king of FOMC BS too much talking weeks if I ever saw it. This week was the annual Jackson Hole conference of global central bankers and just about every Fed official had something to say, including Janet Yellen. And they all contradicted each other. Yellen’s comments about rate hike outlook firming was top market mover, and supported by one piece of weekly data, and then completely shot down again the next week. I won 3 of 5 trades this week too, losing out on the Euro and the Yen due to forex volatility.
Week Five August 29th
This is the week after Yellen’s yellin’ about how the economy has firmed in recent data strengthened the dollar, and set it up for a fall as newer data suggests the economy hasn’t firmed up all that much at all. Honestly, I got lucky again this week with 3/5 wins. I won the SPX, good trade, and Oil, another good trade, and won my Yen trade, lucky, and lost on the Euro and Gold.