no magic | Outlier Insights
Welcome to Outlier Insights!
Each week I work hard to gather and curate information for your convenience. There are two main topics to the newsletter:
Market Analysis is where I share 15 high summary points for the market from the week prior.
Erik’s Brainstorming is where I share a couple ideas to watch each week along with my perspectives; often market related, sometimes not.
If what I do helps you out, please consider either subscribing on Substack or joining the Patreon to support my work and join the Outlier Community! You can also simply share the content, which is a big help as well.
Be an Outlier!
-Erik
Announcements
Outlier Pro Plus - Update!
Outlier Pro Plus is LIVE and the promotional sign up rate is available here: https://www.patreon.com/OutlierTrading
There has been one key adjustment from the initial plan details below:
Maintains all Pro Tier benefits (3x weekly livestreams, skill development programs, private discord, etc).
Adds 2x monthly 60min Zoom Mastermind workshops in a small group setting focused on deepening your trade process. These will be held the first and third Monday at 5pm PT each month.
Session overview.
In these sessions, we’ll work on process building, live case studies, and real-world trade application, all designed to drive practical progress and help you level up your trading. Here’s a sample agenda of what to expect:
1. Status Updates. Trader check ins and progress updates. Lateral information sharing to accelerate learning, break through roadblocks, and support future planning.
2. Market Observations. Build your market context window and translate observations into actionable trade inputs.
3. Trade AAR. Present a recent trade for review, discuss potential improvements to refine process.
4. Live Trade Lab. Given a market scenario, quickly design your own trade. Share and discuss pros/cons, brainstorm potential modifications.
5. Hot Seat. Member-led micro-segment to share a key learning or project with the group.
6. Q&A. Close out any lingering questions.
Looking forward to meeting up for our first session on 7 July at 5pm PT!
Links.
Outlier Pro Patreon - Transform your trading & build a robust approach
Outlier Trading YouTube Channel - Daily Livestreams & Weekly Videos
FREE Outlier Community - Community, education, information
Latest Videos Playlist - Erik’s most recent YouTube videos - released every Sunday
1. Market Analysis.
Inflation Shows Signs of Cooling: The Consumer Price Index (CPI) for May registered a modest 0.1% month-over-month increase, coming in below economists' expectations. The Producer Price Index (PPI) followed suit with a -0.1% reading, suggesting that inflationary pressures may be easing. These figures initially fueled optimism for a potential Federal Reserve rate cut later this year.
Indices Tumble on Geopolitical Fears: Despite a positive start to the week, major indices ended in the red. The S&P 500 and the Dow Jones Industrial Average both snapped their three-week winning streaks. The tech-heavy Nasdaq Composite also finished the week lower, as Friday's sell-off wiped out earlier gains.
Volatility Spikes: Surged on Friday, reflecting the heightened uncertainty and risk aversion that gripped the market. The index closed the week at its highest level in several months.
Oil and Gold Surge: In a classic flight to safety, investors piled into commodities. Crude oil prices jumped significantly on concerns about potential supply disruptions from the Middle East. Gold, a traditional safe-haven asset, also saw its price climb as investors sought to de-risk their portfolios.
Energy and Defense Stocks Outperform: In a direct reaction to the geopolitical developments, the energy sector was a clear outperformer for the week. Defense stocks also saw significant buying pressure, with investors anticipating increased government spending.
Oracle Soars on Strong Earnings: Bucking the broader market trend, shares of Oracle (ORCL) surged after the company reported better-than-expected quarterly results and issued an upbeat forecast, driven by strong growth in its cloud-computing business.
Adobe Slips Despite Solid Report: In contrast, Adobe (ADBE) saw its stock decline. While the company's earnings and revenue topped estimates, concerns about the monetization of its new AI-powered features and increased competition appeared to weigh on investor sentiment.
Jobless Claims Edge Higher: Initial jobless claims for the week ending June 7th came in slightly higher than anticipated, providing another data point for the Federal Reserve to consider as it assesses the health of the labor market.
Consumer Sentiment Dips: The preliminary June reading of the University of Michigan Consumer Sentiment Index came in below expectations, suggesting that consumers are becoming more cautious in their outlook for the economy.
Institutional Investors Favor Arbitrage: Recent data on institutional fund flows indicates a growing preference for arbitrage funds, likely reflecting a desire for lower-risk strategies amidst the current market volatility.
Market Breadth Shows Some Weakness: While the major indices remain near their all-time highs, some measures of market breadth have started to show signs of deterioration. This suggests that a smaller number of large-cap stocks are driving the market's performance, which could be a cause for concern.
Payment Processors Under Pressure: Shares of several payment processing companies, including Visa (V) and Mastercard (MA), faced headwinds this week on reports that major retailers are exploring the development of their own payment networks.
Biofuel Stocks Get a Boost: Companies involved in the biofuel industry saw their stocks rise after the government announced new blending requirements for gasoline and diesel.
Treasury Yields Retreat: U.S. Treasury yields, which had been trending higher, pulled back this week as investors sought the safety of government bonds amidst the market turmoil.
Looking Ahead: Next week, investors will be closely watching for any further developments in the Middle East, as geopolitical risks are now a primary driver of market sentiment. Key economic data to watch includes retail sales and industrial production, which will provide further insights into the state of the economy.
Economic Events for Next Week.
(from Trading Economics)
Looking to make serious progress as a trader without the BS? Join the Outlier community to accelerate your learning curve and develop your trading skillset.
2. Erik’s Brainstorming.
I commonly see posts saying "if only I had more money" or "trading options is so easy with a large account." The reality is, this is completely naive and way off base. In fact, there really isn't some massive change with more money. More specifically, the important fundamentals absolutely don't change with account size.
I started trading with a small account like most traders. I've been able to steadily grow my portfolio through a mix of improving my returns, saving heavily, and growing my income (to save more).
My approach has evolved more from skill development than from an increasing portfolio size. There are absolutely advantages to having a larger account—things like portfolio margin, not being perpetually oversized, fewer ticker limitations, and access to naked strategies.
However, none of that equals edge, which is ultimately what matters. Your capacity to develop and maintain edge comes down to creating a process that works for you. If you struggle trading a small account, it doesn't magically get better with more money. Conversely, if you're effective trading a small account, it absolutely becomes more advantageous with a larger one.
Writing off trading as "getting easier" with a large account lulls traders into a false sense of security where they're more likely to lose money later. The way we get better as traders is by embracing the challenge and doing the work—not ignoring it.
Friday we spent time taking a look at my trading strategies, for nearly 90 minutes. However, the first 30 minutes didn’t mention a single strategy. This is because when creating your approach to trading, you can get started with zero dollars.
The absolute most important step is FIRST defining profit mechanisms, THEN measuring them. Without this step, there is absolutely no use in bothering with indicators, building a strategy, etc. All of this is SECONDARY to actually defining what the market effect is you are trying to monetize.
TL;DR: A larger account isn't some magic pill that creates profitability. It will always come down to the skill of the trader.
Be an Outlier
Erik
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The content presented is for informational purposes only and any opinions, news, research, analyses, or other information contained are provided as general market commentary and do not constitute investment advice. Outlier Trading, its affiliates, and employees are not responsible for any investment decisions made based on the information presented. We do not guarantee the accuracy, completeness, or reliability of any information presented and are not liable for any losses or damages arising from the use of or reliance on this information. By accessing this content, you acknowledge and agree to these disclosures and terms of use.