Sunday, September 13, 2015

All Eyes On The Fed

Hello everyone,

It will be a big week for volatility. Judging by the price action, I see the market anticipating a delay in the hiking of rates.

I am sticking to the contango and backwardation strategy where you can find here.

There is always the possibility The Fed pushes ahead with the first rate increase on Thursday. Yellen has said time and time again during her monthly meetings that the timing of the first rate increase is unimportant but rather the pace at which rates return to a more normal range.

If U.S. economics and job growth remains strong, then I believe The Fed is out of reasons to keep delaying hikes.

If not Thursday then when? Will it be next month, December, next year? Eventually the market will have to handle the first rate increase.

If U.S. economics remain positive this will prove a very good time to enter into a short position in UVXY or a long position in XIV.

I am planning on initiating a small position in XIV after we enter contango. I will not be diving in as soon as it crosses the line unless we are beyond The Fed's decision.

Remember the contango and backwardation strategy isn't perfect but will protect you large losses. For more info and back testing please view the link above.

I hope you have a very profitable week and I look forward to getting back to contango.


Nathan Buehler


  1. I think the threat of government shutdown on October 1 may also be keeping volatility elevated. It will be an interesting week or two.

    1. Excellent observation. I have been watching that drama as well. I don't think they will push it to that but it will get factored in to futures if we get close. I have talked about government debt in many of my articles and just get the cold shoulder. Eventually they will have to face reality.