Last week one of MrTopStep’s followers sent us a link to a story put together by trader Bill Lipschutz from AboutCurrency.com. Bill took the “best of the best” out of the first “Market Wizards” and other publications to form a mélange of trading rules and quotes from some of the best traders in the world. If you want to learn, learn what some of the best traders in the world say and think …
As I read through the post I cannot do it without thinking of all the big trades we did at our S&P desk for most of the well-known traders in the story. While I agree that William (Bill) Eckhardt is a great futures trader, he is also an unknown to most people who trade futures. Eckhardt has alway kept to himself and stayed out of the public eye.
Marty “The Pit Bull” Schwartz also keeps to himself and has a very small, select group of people he deals with and I am one of them. Bruce Kovner is probably one of Wall Street’s best-known hedge fund traders. We did business for his fund when he cleared through Steve Solomon at Bache in the ’80s and ’90s.
Bruce Kovner was and is a great trader and was never afraid of doing big size. Our desk also did business for Paul Tudor Jones. While Paul had his own guy working phones, he also used several outside desks like mine. In the days leading up to the 1987 crash we sold thousands of S&P futures for Kovner, Tudor and Louis Bacon. When one guy sold 800 big S&P’s it would be followed up by the other two selling the same amount or more within a few minutes of getting the first order.
I really do not know who trader Van Tharp is or was, nor did our desk do any execution for him.
On the other hand, I knew Tom Baldwin well. I knew a lot of the early stories because my roommate Brian Henry was his outtrade clerk at Goldberg, the first clearing firm Tom traded at when he first arrived in the bond pit. He took $25,000 and turned it into over $150,000,000, but Tom’s personal and IRS problems were his downfall. I knew Dave Ryan and he was one of the most dynamic traders I had ever met.
While I have always known of Bill O’Neil, I have never met the man, nor did we ever do any business for him. What we do know is he had a very big winning track record.
Ed Seykota I knew very well. He always said you’re supposed to trade up to the event, not the event. Ed’s name filled the halls of the CME and the CBOT 25 years ago.
Gary Bielfeldt I knew very well and actually worked for him in the bonds. Gary was the owner of a CBOT clearing firm called BL&H. Long before the bond pits volume jumped, Gary was scaling 500 and 1,000 bond orders like they were cotton candy and I worked his phone on the floor.
I am sorry I don’t know Edwin Lefevre; he must have been before my time. But I do know who George Soros is. Our S&P desk took orders from several of his funds when they cleared Lehman. What I can say is most of the trades we executed were winners.
I am sure there is a new list of great traders out there, but it’s different now. The days of big buying and selling hitting the pits are gone. The big winning and losing stories that used to be part of the day are gone also. While I do not want to be stuck in the past, I just have not met any new Paul Joneses or Marty Schwartzes and I don’t expect to because it will be impossible to replicate what many of those traders did back then. Risk parameters have changed and so has the way traders buy and sell.
And lastly I’m too old to do the “dog and pony” show I used to do to go meet these guys …
Our view: The Asian markets closed modestly higher (Nikkei + 2.58%) and Europe is trading mostly higher. The S&P is slowly inching its way back to 1650. The analysis below was sent to me by a hedge fund manager and I believe this is where things sit with the Fed’s taper.
US monetary policy – a lot of the financial press continues to focus on Fed tapering but this debate (will the Fed taper, when will the Fed taper, what will the implications of tapering be, etc) has been dominating the narrative for at least two months now (recall Hilsenrath’s “Fed maps exit from stimulus” article first appeared in the WSJ back on May 11 http://goo.gl/CjZYX) and is starting to become old at this point. Looking back Friday’s trading action may wind up being critically important in the tapering saga as both stocks and Treasury yields closed the session at their highs, demonstrating that higher equity prices and higher yields aren’t necessarily mutually exclusive events (despite what many may claim). Interestingly, psychology is beginning to shift whereby higher rates are now considered fuel for stocks rather than a hindrance. Over the last few days (esp. on Friday) expectations increasingly have coalesced around 9/18 as the date on which Bernanke will formally confirm LSAP tapering, suggesting the matter may finally be fully discounted and less subject to debate. The coming two weeks will bring a slew of Fed-related headlines, inc. FOMC minutes and a Bernanke speech this Wed 7/10 but investors should start focusing a bit less on Fed-related matters going forward (at least until the next jobs report).
Let’s be honest. All the talk about tapering spooked the bonds and the S&P, but the only one it really affected was the bonds. The S&P (at least for now) has shaken off most of the talk like it’s done with just about every negative that has been thrown at it for the last two years. What we do know is the Fed can’t keep printing money forever. Our view is we think the S&P is still targeting 1655 on the upside. While there are all sorts of buy stops above 1639-1640 level, the big stops come in above 1649 to 1654. We again lean to selling the morning rally and buying weakness. As always, keep an eye on the 10-handle rule, and please use stops when trading futures; live to trade another day.
- It’s 8:15 a.m. and the ESU is trading 1641.75, up 6.25 handles; crude is down 7 cents at 103.07; and the euro is down 9 pips at 1.2869.
- In Asia, 10 out of 11 markets closed higher (Shanghai Comp. +0.37%, Hang Seng +0.49%, Nikkei +2.58%).
- In Europe, 9 out of 12 markets are trading higher (DAX +0.91%, FTSE +0.79%).
- Today’s headline: “S&P 500 Futures Inching Their Way Back to 1650”
- Total volume: LOW 1.3 mil ESU and 5k SPU
- Economic calendar: NFIB small business optimism index, Redbook and a 3-year note auction.
- Fair value: S&P +7.14, NASDAQ +10.07
- MrTopStep Closing Print Video: https://mr-topstep.com/index.php/multimedia/video/latest/closing-print-7-08-2013
- Ned Davis Expiration Study for July – https://mr-topstep.com/index.php/equities/3687-expiration-study-for-july