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In the Florida Republic, Two O'clock quickly becomes Five O'clock as the season returns.
The humidity is still somewhere between "melting" and "soaking".
But that will soon pass - as October gives way to somewhat more reasonable temperatures.
The snowbirds are starting to fill up the bars. It's competitive at 3 p.m. for a Happy Hour seat, so you'll see the cars arrive sooner each passing day of the week.
My show ends at 2 pm each day. And while the happy hours start across the Gulf, I'd rather do two things with that hour.
First, replanting my daughter's garden.
Last week, we re-cleared about a tenth of an acre, which will hold a dozen planter boxes and two greenhouses for fruits and vegetables.
It's a work in progress - but a fine October project.
I'll have the afternoons to get everything in the grounds and fight away the vines that would love to cling to that dirt.
But there's something else that I prefer to do at 2 pm.
If you prefer the afternoon cocktail, I suggest you pay attention.
Here's a way to speculate responsibly and hopefully pick up your tab.
It's Open Season in the Afternoon
Stanley Druckenmiller is one of the few people I listen to for market insight.
The most important lesson I took from Druckenmiller, the former president of Duquesne Capital, came from an interview in 1988 that noted the importance of following liquidity in the global markets.
I'm not talking about central banks. I'm talking about every dollar that could find itself into risk assets - from shadow lending to the money hiding in your couch that could make its way to the bank.
But the other major event came from a 2018 interview that Druckenmiller did.
At the time, he talked about the role of algorithmic trading on the markets. Remember, the machines don't care about the threat of recession. They're not interested in more than exploiting behavior, collecting pennies where possible, and squeezing every cent out of a trade without human emotion bogging them down.
As Druckenmiller noted, the big shift toward such trading has created a market that can lack a trend. In a world dominated by standard deviation lines and Bollinger bands, the machines have a predictable habit of waiting until stocks fall into the third standard deviation band... and then buying the dang dip. What does this mean?
Well, let's turn our attention to the charts.
The following chart is a breakdown of the SPDR S&P 500 ETF Trust (NYSEArca: SPY). This is one of the most liquid and widely traded instruments in the world.
This chart shows Wednesday, September 27's trading.
The blue line in the chart is the one-minute Volume Weighted Average Price (VWAP). The line above it and immediately below it (and all that green space in-between) are the first standard deviation bands.
The second lines are the second standard deviation.
The lines all the way at the top and all the way at the bottom represent the third standard deviation.
If you pay very close attention, we're seeing bidding every time the SPY dips into that third standard deviation. It might not last long, but short-term traders and individuals using ODTE options are bidding to try for a quick score.
This happened four times today, with the strongest move out of the third bottom band in the final two hours, when institutional trading picks up on an intraday level.
The markets produce unusual patterns.
We're always looking for an anomaly, something that gives us a bit of an edge. If the market sells off in the morning, I tend to look for a reversion off the second standard deviation lines, at 10 am, 11 am, and especially at 12 pm, when volume is low.
What's the Trade Here?
I like to end my broadcasts with a reminder for investors and traders that the 2 pm. That is where we can find a lot of institutional buying enter the market - right at the start of the hour.
If the S&P 500 is trading down at the second standard deviation line from its Volume Weighted Average Price (VWAP), I would like to bid using cheap same-day options.
Why is this powerful to speculate smartly at 2 p.m.?
The SPY $424 call traded for as little as $0.23 this afternoon at the bottom of this chart. It closed at $2.35. That's a 1,000% gain.
Or $23 bucks into $235.
I'm not suggesting that this is a perfect science. But speculating and using tight stops around a position can fuel impressive gains. In the case of this trade, you bet $25 and tolerate a loss of $10.
But if it hits... you'll be happy you're at your computer.
What If I Don't Use Options?
If you do not want to trade options, I get it.
This chart is the Direxion Daily S&P 500 Bull 3X (SPXL).
Shares slumped to roughly $75.60 today but rebounded off that deviation line into the final hour. Shares popped above $78.00.
Just ten shares - and proper trailing stops - could have generated a large enough gain for Happy Hour nachos and your drinks of choice.
I'll bring the salsa from the ingredients in the garden later this year.
Florida Republic Capital
Secretary of Finance