DeCarley Perspective Archives
In each edition of the newsletter, DeCarley will share their fundamental, seasonal and technical outlook with visual charts to support their analysis. "The DeCarley Perspective" may contain specific trading recommendations or broad-based trading ideas dependent on the opportunities that present themselves.
Clients and subscribers receive the newsletters in a timely manner, but here is a sample of out-dated archives of the DeCarley Perspective for you to browse. (Please note, in May 2011 The DeCarley Perspective was transformed into a weekly newsletter from a monthly).
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Long and short options can tame the risk of futures trading
This newsletter was emailed to brokerage clients on July 11, 2018.
Futures contracts don’t have to be scary, deleverage them!
The futures market is the Las Vegas buffet of the financial world. It is the place were glutton is not only free, but it is encouraged. However, just as frequenting buffets will lead to an expanding waistline, failure to approach the futures markets reasonably will lead to adverse consequences. Nevertheless, within both venues, it is the consumer that chooses the level of indulgence.
It is easy to become intimidated by the futures markets. After all, the stories of life-changing losses (and sometimes gains) are abundant. The amount of leverage provided to traders by the futures market is stunning; and unmanageable for most traders. To put it into perspective, a crude oil futures trader can buy or sell a single 1,000-barrel futures contract valued near $75,000 (while the price of crude is at $75.00 per barrel) with a minimum margin deposit of $3,245. To clarify, a speculator can make a wager on $75,000 worth of crude oil using the futures markets with less than $3,500; this means that regardless of account size the trader is making or losing money based on the value of $75,000 worth of oil. Further, each $1.00 price change in oil results in a $1,000 of profit or loss for a futures trader; a trader with the minimum funding could either double or deplete the trading account with a mere $3.50 move in oil. This form of speculation is obviously exciting but is closer to rolling the dice at the craps table than investing.
Read more: Long and short options can tame the risk of futures trading
Speculators are as short Treasuries as they have been in years, are they right?
This commodity trading newsletter was emailed to DeCarley Trading brokerage clients on January 31st, 2017.
We all know the case for being a Treasury bear; the arguments for higher interest have been vigorously circulating rates for years. For instance, a plethora of articles have been written discussing the assumption that years of unprecedented money printing by the Fed will eventually catch up to us in the form of inflation. In turn, investors have been inaccurately expecting this to force bond prices dramatically lower.
Others claim interest rates can’t stay historically discounted because the cure for low prices is always low prices. In other words, low yields should discourage investors from putting money to work in Treasuries and the lack of demand should deflate bond prices while inflating interest rates. Yet, neither of these nor the dozens of other, premises touted by Treasury bears have yet to materialize. Further, each time traders have acted aggressively on such ideas they have been burned by the new reality of lower for longer interest rates. Let’s take a look at a few developments that suggest the path of least resistance for US-backed Treasuries is higher, not lower. Likewise, yields could move lower, not higher.
Read more: Speculators are as short Treasuries as they have been in years, are they right?
We are getting mixed signals in our crude oil futures market analysis
This newsletter was distributed to DeCarley Trading brokerage clients on January 20, 2017.
We are seeing mixed signals in Texas Tea
There is always some uncertainty involved in crude oil market analysis, yet in the current environment, I would argue there is only uncertainty. We like to look utilize a handful of market analysis tools which generally include seasonal tendencies, the Commodity Futures Trading Commission’s (CFTC) Commitments of Traders Report (COT), and technical analysis. Each of these schools of thoughts are resulting in conflicting conclusions. Historical seasonal patterns suggest the path of least resistance during this time of year is higher (bullish). On the other hand, the COT Report warns of a potentially massive wave of speculator liquidation (bearish). Adding to the confusion, the price of crude oil as deemed by prominent chart analysis techniques is precisely neutral.
Read more: We are getting mixed signals in our crude oil futures market analysis
- Another look at the crude oil futures market
- Fed Funds Futures aren't pricing in a December interest rate hike
- What do Fed Funds Futures tell us? Are they a short?
- Bandwagon bulls in crude oil signal the rally might be due for a pause.
- Are gold futures in a bull market?
- Remember the Ags?
- Is the oil run done yet?
- The greenback holds the key...are we finally turning the corner?
- GC is on the verge of breakout or bust
- Are crude oil and stocks finally decoupling?
