Buck Out

by Ken Benton

  “This is just a price chart. A daily one, at that.”

  “The pattern suggests large blocks permanently moving into the Yuan. The Yen is looking similar.”

  “And this you find disconcerting?”

  “When you’re as skilled as I am at recognizing fundamental holding shifts at the world’s largest institutions, chart patterns can sometimes tell a reliable story. I believe this one does.”

  Dianne placed a hand on her forehead, her pink-and-white painted nails vanishing under a drape of red hair.

  “Mr. Boone, what do you believe your job description is?”

  Ryan paused. She never called him by his last name. He might be on thinner ice than he thought. Ryan straightened up in his chair before answering.

  “To protect Barclays by identifying and assessing market risks in its securities portfolio.”

  “That’s only half your job! The other half is to identify opportunities for increasing the return on our holdings—an important part of your function here, which you have utterly neglected since I’ve known you.”

  “That’s not true—”

  “Name one buy recommendation you’ve made lately.”

  “I’m making one now: Asia. Everything Asia. Currency, stock indices, production commodities.”

  “Because of this chart?”

  “No,” Ryan said. “No! Of course not. Because of trends I’ve analyzed in my last three reports.”

  “The bond market correction.”

  “There’s too much secondary market volume for it to be a normal correction.” Ryan heard his tone become louder than he wanted, but couldn’t control it. “The Fed can’t keep up with it. This little spike in interest rates we’re seeing is nothing! The Federal Reserve’s bond buybacks have obliterated their own self-imposed limits. I’ve been watching them. They’re panicking over there. But the volume of bond transactions only continues to increase.”

  “You think Barclays Bank should dump U.S. Treasuries and move large amounts of funds to Asia,” Dianne said.

  Ryan scratched the side of his head and calmed down some. “When you put it like that, it sounds pedestrian. But yes, that is the basic conclusion of my research. It’s what I honestly believe, and I don’t advise it lightly.”

  Dianne sighed. “Thanks for being honest. It makes this easier for me.”

  Uh-oh. Ryan recognized the yellow-colored slip of paper through the window of the envelope she was now extending towards him. It was the color of doom.

  Ryan tilted his head. “You can’t be serious.”

  “I’m sorry, Ryan. I am. But we have too many naysayers on staff, and you’re the worst offender. Honestly, I must question whether you even belong behind a desk at a financial institution. With your predictions, you should be holed up in the country somewhere, hoarding survival supplies and securing your perimeter with an assault rifle.”

  Ryan almost dropped the envelope. He eyeballed his soon-to-be ex-boss with suspicion. Yes, he was long aware she didn’t like him. But would she go to such lengths as to have him followed by a private investigator?

  Dianne offered only a polite smile in return. “Again, I’m sorry.”

  Ryan opened the envelope. When he saw the amount of the check he said, “I believe you.”

  “Yes.” Dianne nodded. “Even the last senior trust officer we fired didn’t get that big of a severance. They must feel guilty upstairs.”

  “How do you feel?”

  She leaned back in her chair. “Relieved, mostly.”

  “Fair enough,” Ryan said. “But let me ask you this. What will you tell my next prospective employer about me?”

  “The truth.”

  Ryan glared at her.

  Dianne shifted nervously. “Do you have any ideas about what you might attempt to do next?”

  Ryan smacked the envelope across his hand and stood. “Looks like day trading.”

  Chapter Three

  The sound of someone smacking an envelope across their hand drew Hannah’s attention. When she looked up from her desk, Agent Alton Brown was leaning in her doorway, wearing a devious grin.

  “Special Agent Hannah Lane Carter?” he said.

  Hannah knew something was up. Field assignment? That’s what she needed. Oh, please let it be a field assignment.

  “Just Hannah Lane,” she replied.

  Alton raised an eyebrow. “All signed and finalized?”

  “No.” Hannah glanced at her bottom drawer. “Haven’t gotten to it yet.”

  “I see.” Alton straightened and took two steps forward. “Well Agent Lane, I have an early divorce present for you. Take a look at this.” He tossed the envelope on her desk.

  Hannah eyeballed Alton as she opened it. He was a handsome man, wide in the shoulders, with dark hair similar to Malcolm’s. Perfect teeth. Single, available, and his hobby—of all things—was gourmet cooking. What a dream catch he would make someone, except for one thing. Like Hannah, Alton was married to his work.

  He didn’t need to be. It was kind of a shame. At four years in, Alton had a ways to go before being eligible for phase two. Hannah, on the other hand, was ripe. The red spot on her office calendar marked her seven-year anniversary next month. That would move her into the hopper for phase two selection. It would be the fulfillment of her dream: protection work. There was just one problem—that little incident a couple years back. It wasn’t a career killer, but it was enough that Hannah knew she now needed to accomplish something noticeable to balance the scales. Like a successful high-profile field case.

  Hannah removed the contents of the envelope and saw that it was a $50 bill paper-clipped to a map printout. She pulled the bill away and held it to the bulb of her desk lamp.

  “It’s another Fifth-Avenue Fiver. So what?”

  “That particular fiver, my dear, is our ticket to the great outdoors.”

  Hannah looked back up at him. “Who’s ticket?”

  “Yours and mine. We’re on the 9:15 to Pittsburgh in the morning.”

  “Don’t tease me, Alton.”

  “Since when have I done that? The bill in your hand came from the cargo of a bobtail truck in the Maryland panhandle yesterday, compliments of our Bureau friends.”

  “How large of a load?”

  “Five million, fresh off the press.”

  Hannah whistled. “That’s half a million in real currency. These guys have stepped it up.”

  “This will set them back,” Alton said.

  “So the FBI confiscated the shipment in Western Maryland?” Hannah stood. “That’s too bad, actually. Would’ve been better to bug the truck and let them deliver it.”

  Alton tilted his head. “See, this is why I like working with you. Not only are you smart, you have an almost-spooky clairvoyance. That’s exactly what they did.”

  “Great!” Hannah smiled coyly. “So they got the distribution end of the gang?”

  Alton frowned. “No. Unfortunately, the driver was smart. He baited the FBI with a trap-test as soon as he came into the city.”

  “Amateurs.” Hannah shook her head in disgust. “When will those guys learn to turn all these operations over to us?”

  “We might have been fooled, too. He paid a couple high school kids to unload some of the decoy boxes into a carport. The FBI agents sprung on the poor kids. Kind of comical.”

  “That means the driver escaped, too?”

  “Yes, but they’ve identified him from aerial photos. Parolee by the name of Joseph Slate. Done a couple bits for stolen goods and money laundering. He’ll be apprehended the first place he shows up.”

  “Anyone smart enough to pull that test will know he’s been pegged,” Hannah said. "That man will likely go fugitive.”

  “You might be right. Not our problem. You and I are headed to the country.”

  “Why Pittsburgh?”

  “The Bureau’s meddled too far into this one, but they’ve done a decent job. Can’t really blame them, since they’re the ones who stumbled upon th
e informant. Our Pittsburgh office is closest to the action. I have the complete file. You can read it on the plane.”

  * * *

  “The volume’s too low,” Ryan said.

  “That’s intentional.” Malcolm walked to the kitchen and raised his voice. “The business reporters will plant stupid suggestions in my head if I let them. Throws me off and makes me open bad positions.” Malcolm hit the juicer switch. If Ryan responded, Malcolm didn’t hear him over the grinding noise. By the time he returned to the den, Ryan had turned the television sound up.

  “If you insist on chatter, put it on Bloomberg, not CNBC.” Malcolm set one of the drinks down on Ryan’s desk.

  “What the heck is this?” Ryan lifted the glass. “Looks like caterpillar guts. I’m a coffee man. Black, not green.”

  “I call it mean green,” Malcolm said. “It’s what we ninja traders need. Vitalizes the system, heightens our senses, gives us a shot of natural energy. Coffee comes later. You gotta have mean green first, if you’re gonna make any green today.”

  “I was planning on being an observer for the first couple of weeks.” Ryan sniffed the drink and made a face.

  “Excellent idea. That’s for drinking, not smelling. Tastes better than your nose would have you believe.”

  “Let’s hope my new career pays better than my brain would have me believe.” Ryan took two big swallows of the green juice.

  “It will, if you’re a good student. The first thing you have to learn is strict discipline. When we find a setup we like, we define the risk at the outset and never adjust it. Think of it as making a bet. We’re happy to live with the results, win or lose, since we’re making bets where we stand to win a lot more than we’re risking. I’m going to stick with breakout plays for the next few weeks, just to drive this point home. Heck, it’ll probably be better for me, too. That’s where the real money is.”

  Ryan held the glass in front of his face. “This stuff isn’t that bad, actually. So, you think stocks breaking out on a five-minute chart, with a large volume spike, represent pockets of non-randomness in the market?”

  “I couldn’t have put that better myself. As long as the entire market isn’t also suddenly running. There’s a couple other stipulations as well. And my favorite plays are ones where there is no news to explain the breakout. I have a feeling you’re going to do all right at this.”

  “Wish I shared your confidence.” Ryan finished off his green drink. “Maybe it will help to see some examples.”

  “Funny you should say that.” Malcolm picked up a small stack of papers from his printer. “I printed these out for you last night. Charts of breakout plays that occurred within the last couple of months. I cut them into storyboards, so you can see the setup on the first page and then what happened on the next. It’s not perfect study material, because the setups have a slightly-different appearance when they’re developing on your screen than they do at the end of the day. We should get a few live ones to observe in the coming days. For now, I want you to burn those images into your retinas. I’ll tell you if there’s something to see on the screen.”

  “Now?” Ryan asked. “The opening bell’s about to ring.”

  “Especially now. Lesson number two is to ignore the first twenty minutes. Too much chaos. Nothing reliable develops. In fact, I prefer not to do any trading for at least a half-hour after the opening.”

  Ryan laughed and accepted the charts.

  Forty minutes later, he called Malcolm over to his computer monitor. Malcolm reluctantly stood up. Ryan wasn’t supposed to be finding setups yet.

  “Look at this,” Ryan said. He held one of the printed charts up against his monitor. “Looks exactly like this example you gave me.”

  “It’s still a little too early in the session,” Malcolm said. Then he saw the chart on Ryan’s screen. “That is interesting, though. What is it?”

  “TBT.”

  Malcolm groaned. “Not bonds, man.”

  “Why not?”

  “Well for one thing, that particular ETF is leveraged with derivatives. Which means it’s not an accurate tracker of the underlying. In fact, it’s an inverse fund, which means there really is no underlying, as it’s all calculated by shorting a commodity.”

  “Why does that matter?” Ryan asked. “It’s breaking out on strong volume.”

  “I just don’t trust it. It’s not like a regular stock, or even a regular ETF. But even if I concede your point—which, by the way, would normally be a good one—the range it’s breaking out of isn’t very long.”

  “But it’s tight,” Ryan said.

  Malcolm had to smile. Ryan was making a valid argument. Perhaps he would end up being an asset to the operation after all, once Malcolm broke him of his old habits.

  Ryan then did something else impressive. He switched the chart time-frame to daily.

  “That’s what I was going to have you do,” Malcolm said. “You can see here that this movement is more of a continuation of a recent trend, rather than a real breakout.”

  At that moment a reporter on the television, which was still tuned to CNBC, caught Malcolm’s attention.

  “The Federal Reserve has now issued a statement responding to criticism of the recent jump in interest rates. As most of you are aware, the rates on thirty-year mortgages have risen nearly two percentage points in the last month, one of the sharpest increases in modern times. According to Fed Chair Jill Younger, the move is a natural result of recent bond market activity which the Federal Reserve is not opposed to, and is reluctant to interfere with. Ms. Younger asserted that the economy is currently strong, and a period of higher interest rates will protect the American consumer from a sudden inflationary trend.”

  “Since when is the Fed reluctant to interfere with bond market sell-offs?” Malcolm said. He picked up the remote and turned the station to Bloomberg, lowering the volume in the process.

  “They aren’t,” Ryan answered. “That statement is an outright lie. Like I’ve been trying to tell you and everyone else, the Fed’s been putting everything they have into buying back the sudden deluge of Treasuries being dumped. Even they can’t keep up with it, and they get to print money to make the buys with. This is why I’m out of work sitting here with you now, instead of analyzing securities for one of the world’s largest banks. But higher interest rates are the least of our problems, if what I think is happening is happening.”

  “That’s another reason we shouldn’t touch that ETF, Ryan. You have an emotional attachment. It represents something you’ve been watching and have strong opinions about. Opinions will sink you in my business. We want to find trades on stocks we don’t give a rat’s ass about, and have no directional bias on. To make money we simply react and place smart bets, unaffected by emotions.”

  Ryan grumbled. Malcolm reached for Ryan’s mouse and switched the TBT chart-view back to the 5-minute time-frame.

  “There, see? It’s pulling back. Not running away. Probably will fall back into the range.”

  “What if it doesn’t?” Ryan asked.

  Malcolm didn’t answer. He stood there above Ryan watching the trading action on the screen. Twice he clicked the chart over to a 1-minute and back again. TBT had all appearances of holding strong at the earlier breakout point. If this were any other stock, Malcolm might trade it. There was a good chance it would bounce here, and if it did, the sky was open above—no areas of prior resistance. A tight stop could be set immediately below the breakout point for minimal risk.

  TBT started bouncing back up.

  “I’m going to buy this just to teach you a lesson,” Malcolm said. He ran back to his own desk, punched in the symbol, did a quick calculation, and bought 500 shares.

  “Don’t do it because of me,” Ryan hollered. “I’m here to learn, remember? The student should be the one paying for the lessons. I figured we could watch it, that’s all.”

  “It’s all right. The setup isn’t that bad. I want you to lose the fear of pulling the trigger, to
o, when the time is right. I’m able to set a tight stop under a strong support point, so the risk is low. And the trade is in the direction of a larger time-frame trend, which is always good.”

  Ryan grinned. “Doesn’t sound like such a bad bet, then.”

  “We’ll see.”

  It wasn’t a bad bet. TBT took off like a rocket. At first the unrestrained veracity of the move rattled Malcolm. He stood with his finger on the mouse, ready to exit on a moment’s notice. This wasn’t a normal breakout. Something unusual was happening. Malcolm even turned the volume back on Bloomberg, so they could listen to the chatter about the bond market “tanking again today.”

  Malcolm’s trade quickly gained so much profit, however, that he could comfortably walk away from his desk and think. Sometimes he needed to do that. He went to the window and fiddled with the blinds.

  A glimmer of sunlight caught his eye as it sparkled on the gold lampstand in the corner of the den. Hannah always loved that lamp. Malcolm was surprised she left it. In fact, that lamp still being here was a shining beacon of hope forecasting her possible return.

  Ryan went to the kitchen to make coffee. Malcolm remained at the window and thought about Hannah, thought about his open position, thought about the severe bond market sell-off.

  The lampstand sparkled again. Malcolm found himself overcome with a sudden urge that violated every trading principle he was now sworn to. He went back to his computer and switched the chart on TBT over to a 1-minute time frame. It was pulling back some now. Resting? Or topping out? Who could tell?

  Quickly, before Ryan came back with the coffee, he doubled his current position. What the hell. This wasn’t a real trade, anyway. It was just to teach Ryan a lesson. Malcolm never would have been involved in this thing if it wasn’t for him.

  It turned out TBT was only resting. The bond sell-off continued, and TBT kept shooting up.

  Two hours later Ryan left to fetch calzones for lunch, unaware of Malcolm’s increased position. While he was gone, Malcolm took advantage of another small pullback to double-up again, ignoring the voice inside him screaming in protest.