From the desk of Joe Rios

The pros are back from vacation and should be ready for a full week of trading.  There has always been a lot of market tradition about January. Therefore we can expect the pundits to dominate the airwaves and publications with their new year predictions.  As active quant traders we need to block out the noise and stay true to our discipline with the process of the trade as our main focus. There was not much news over the holidays but we do have normal flows in the week ahead including FOMC meeting minutes, Initial Jobless Claims and the Non-Farm Employment Change closing the week on Friday.

Last year’s velocity leaders are:

Upside

Coffee                 +44.2%

Nasdaq 100         +18.4%

US 30 Yr Bond    +13.2%

US Dollar              +13.2%

Downside

Crude Oil             -44.7%

Natural Gas        -31.5%

Silver                     -21.6%

Soybeans            -20.7%

From the macro view, the market’s correlation painted the picture with clarity with US 30 Yr Bond and US Dollar both gaining 13.2% for the year. The relationship with the US Dollar and Treasury interest rate yield played out throughout the year. The relationship between S&P 500 +13.2% and the Japanese Yen -13.1% also delivered tight correlations as seen during the unwinding and initiating of carry trade positions. What will the new year bring us in price action? Will the correlations in the markets remain tight? Will last year’s velocity leaders continue their direction or retrace? Or will there be new velocity leaders? Regardless of last year’s leaders, I am starting the new year with focus to the process of the trade. Finding a strategy that works  consistently is easy. It’s sticking to it that is difficult. For that reason, I have prepared special training for the first 90 days of the new year. Intended to help and keep our members better equipped to make 2015 the best year yet.

Joe Rios

Founder – Rios Quantitative LLC

Live Trading Rooms and Events: The Trading Room TradeLAB

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THERE IS A SUBSTANTIAL RISK OF LOSS IN TRADING COMMODITY FUTURES, OPTIONS, AND FOREIGN EXCHANGE PRODUCTS.  PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.