Buyback Blackout Window & Crude oil

Buyback Blackout Window & Crude oil

Companies are gradually entering the buyback blackout window phase. Some larger market players in the bidding war may decide to hold back or reduce their bids.

Now, you may wonder what the "buyback blackout window" is or means. To explain it simply, the "buyback blackout window" is a period when companies aren't allowed to buy back their own stocks!

This is usually around the time they're about to report their earnings. It's a quiet period during which. It's a quiet period during wich they can't influence or inflate their stock prices by repurchasing their own shares.

(I promise, this newsletter will be a bit shorter than usual. Lots of people request shorter forms of newsletters with more frequent postings)

According to Goldman Sachs, around 60% of companies are currently in a quiet period and cannot buy back their own stocks.

This has an impact on the overall demand for the equity market, possibly leading to lower prices as we enter into a window of weakness because a big source of demand, which comes from the companies themselves will temporarily be gone.

By the end of the week, this growth was around 85%, so even more companies are entering that quiet period. That means that even fewer companies will be buying back their stocks.

This can make the equity market more vulnerable to downward pressure on prices.

Source Goldman Sachs

Also in the news:

“We never used the word ‘pause,’ and I wouldn’t use it here today,”

Powell told lawmakers.

Powell: Inflation Fight Has ‘Long Way to Go’
A week after central bank officials opted to skip a rate hike, the Fed chair tells lawmakers it “may make sense” to raise interest rates further.

make the equity market

Put-call normalized skew

The put-call skew shows positioning is crowded. Downside protection is attractive right now. It's relatively cheap to hedge your exposure, buy insurance when you can, not when the house is on fire

Crude CTA Flows

  • Trading well after breaking $70/bbl
  • WTI 50DMA is $73.45
  • CTA flows are skewed to the upside
  • Big to buy in an up small tape

Crude oil just kicked down the door of the $70 per barrel price mark and is still going strong.

The 50-day moving average price for West Texas Intermediate (WTI), is $73.45 per barrel.

Money managed by Commodity Trading Advisors (CTAs) is leaning more towards betting that the prices will go up.

I think I may come back one day to explain more in-depth about CTAs and the tape with a free medium article.

End-of-the-quarter retirement fund adjustments

Estimate Global bonds are for sale in flat tape. CTAs are looking to sell off their global bonds in a market that isn't really moving up or down.

However, if bonds were to rally, there would be a "large upside skew." This means that there would be a big push or tendency/chance for the prices to keep going up.


I posted this on Discord yesterday (Tuesday after the market was closed, technically Wednesday in the morning (since after midnight counts as the next day))

I did short TSLA on Tuesday. Admittingly I felt some discomfort because of the Twitter hype and Tesla parent news, but I also figured that the news event could be an exit before the blackout period.

In the end, it turned out to be a profitable trade after all.

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