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Weston NakamuraVisionary
Real Vision Exchange Manager, Programming and Community Engagement

How to EXIT trade: Short China Tech / Long US Tech (Short CQQQ / Long QQQ)

Its time to lock in gains and begin to close the trade.

The objective of this pair trade was to have a market neutral, net zero cost, reduced directional volatility, easy and straight forward way of betting against Chinese tech equities on further Chinese gov control actions (particularly tech focused), while maintaining US tech equity long exposure. Index ETFs (QQQ: Nasdaq100 / CQQQ: China tech) remove the single stock headline volatility single day double digit short squeeze risk, while providing significant enough movements to matter (as foreign investors in particular will go from stock picking which names will be at risk → indiscriminate broad based sector wide selling).

It seems that has been playing out quite well. Since inception, if you were just short CQQQ, you’re up 15% as of Mon close but took massive risk with unlimited downside exposure. If you just were long QQQ, you’re up about 4%, not bad for 1 month on an index. And if you were long QQQ funded by proceeds from short CQQQ, you would be zero cost out of pocket +23%, outperforming just being short CQQQ by 8% and just long QQQ by 19%.

You were also able to avoid drawdowns, which takes the psychologically driven emotional trading out of it and allowing you to keep the position on. For example, if you were just long QQQ opened on July 1, and enjoying a +3% gain by mid July - then on Mon July 19 when markets globally were deeply red and... (More)

Weston NakamuraVisionary
Real Vision Exchange Manager, Programming and Community Engagement

HK & China Equities Hammered

EdTech got hit hard with Chinese Characteristics today in Asia trading - imagine owning shares of a publicly traded capital enterprise, and the government suddenly says “you’re now a non-profit.” Chinese gov clamped down on EdTech industry, citing education inequality among other things - they’re no longer permitted to raise capital or IPO or open new learning centers or hold weekend classes. Or make money, essentially.

Koolearn Technology -34%, New Oriental Education -47% today. The “no profits allowed” for education came last Friday when the sector saw it’s first round of sell offs -40% before heading into the additional -40% today.

Tencent had its worst day in over a decade as the gov came down on their unfair exclusivity for music licensing (also known as music licensing) -7%. @Ralph Humphrey on this story this weekend.

The China & HK indices took a huge hit as a result. CSI300 -3.2%, China A-Shares -5%. HK’s Hang Seng Index -4.1% worst in 14 months. The US-China squaring off not helping either. @Christopher Moir ← bearish HSI call continues working fantastically well.

For those who may be unfamiliar - These may be obscure to western individual (and some institutional) investors - but these are the largest equity markets outside US. Hang Seng index is Tencent, Alibaba etc as well as names like HSBC.

HSI below 2020 & 2019 year end close levels, melting down led by HSI Tech.

HSI vs 10Y UST Yield

CSI300 (largest stocks in Shenzhen and Shanghai) plummets, while copper rises... (More)

Weston NakamuraVisionary
Real Vision Exchange Manager, Programming and Community Engagement

BTC +12% surge?!? What’s the big news??

Oh.. just a BTCJPY ¥4mn technical level… thats it..  

A psychological / real, round figure technical level an hour into Japan Monday cash open with indices +1.8% out the gate following a 2 day market holiday (Japan closed last Thurs + Fri). And during the most illiquid hour of the week- EU asleep, Sun night US, and HK/China a half hour from cash open (take a look at HK: New Oriental Education & Scholar Education Group -35%, -40%, on ever more of gov crackdowns - this is where the Asia focus was).

Not saying “therefore price action will be ___,” just pointing out to not over-analyze this particular move.

Japan retail already trying to short this move. And no this wasn’t off Amazon allowing BTC payments headline from like 10 hours prior. Just plain old >¥4mn

Next test ↓ 

If you want to go long, you have plenty of upside after BTCJPY breaks ¥4.5mn and “confirms” a new range vs chasing moves like this only to have them slam into resistance and keep you in the red for days/weeks +

Sorry- they don’t call me No News Nakamura for nothing (nobody calls me that)

Weston NakamuraVisionary
Real Vision Exchange Manager, Programming and Community Engagement

For the 🇯🇵 Opening Ceremony

Heres your “moment of silence“

DM indices YTD % - great job NKY225

Maybe not “the Enron of COVID“ as I had labeled it - but looking more like the Lehman of COVID. 

Olympic Stadium Capacity: 64,000

In attendance: 990 of the world’s COVID policy direct influencers & implementers - literally the 1% (spoiler alert: COVID remains & resurges, hence 1% full)

Outside Olympic Stadium - thousands and thousands of pissed off protestors creditors who are paying the economic price, as well as paid for the stadium itself.

Great call not allowing them in for social distancing precautions

Gotta hand it to them - they’ve managed to televise the COVID fail issue, the global wealth divide issue, and the waste of fiscal/taxpayer issue in one