Here’s the point. The markets look sick on the back of some of the bleakest economic indicators we’ve seen since the Great Depression. Yes there are some optimists that see the cup as half full, and to counter them, there are the pessimists who see it as half empty. I see it for what it is: completely dry. Not a drop left in the cup.
Notwithstanding my annoyance at last week’s “technical glitch” that probably made a few people over a billion dollars, the problems it caused for my programs because of extremely large tails in many stocks is a bigger hindrance. The lows set on Thursday’s sudden cascade 1000 point sell-off, although we’re being told was caused by a [...]
The desk I run is an Institutional Long/Short Equity desk which tries to maintain a “market neutral” book. This doesn’t mean “buy 1000 shares of IBM and 10 puts”. What market neutrality means is that one need not be concerned about the overall direction of the market, as momentum traders are, but rather have long [...]
30-year Treasury Yields are about to spike along with a dollar rally. I feel this is the catalyst to trigger a sustained pullback in equities, which will reflect our rising unemployment rate and all the stimulus plans that are slowly phasing out. Equity Long/Short Market Neutral traders will have an edge in this market over [...]
Gold went over $1000 and sustained a rally to $1020. A dip to test, and re-test $1000 is likely. This magical number will continue to be used as the line at which bulls and bears continue to thrash each other relentlessly like a tug-of-war match in an Ultimate Fighting chained rink. I’m watching the 70.50 [...]
With all of the clutter and insanity due to groups turning into recruiting grounds and advertising forums for esoteric and mindless products, I was compelled to launch my own LinkedIn Group which is being emphatically embraced by the systematic and discretionary proprietary trading universe, to my delight. I know many of you are Prop. Traders, [...]
Corporate bonds have been on a tear since April; however, the paper of financial firms has outperformed all other categories by a significant margin. This is odd and perhaps suggests the market is either not correctly pricing this paper, or something is artificially preserving their value. During April and May, investment-grade subordinated financial bonds returned [...]
Fear and risk aversion are creeping back into the market. Will this be an acute development or something with longer duration? Data coming in very discouraging. March ADP employment figures were a disaster with over 50% of the losses coming from the service sector. It looks like most promising equity market is China. The Shanghai [...]
Week of November 10 Still bullish on the market but defensive in nature. Not putting myself out there for anything, in either direction. Take trades for the time being and generate cash flow. When the rally comes, it’ll be obvious. TRIN behaving very bullish all week, spending Wed & Thur around 3.00 and as high [...]
Week of November 3 THUR- Heavy volume on the sell-off. Market’s spooked by the lopsided gov’t. As expected, but didn’t exploit. Monitor airlines for entry levels (see below). Many charts look like gaps from Tuesday were closed. Only problem is volume expanding across the board. So many charts look terrible, I feel like we’re going [...]
“We’re going to see five hedge funds fail for every bank, maybe more,” A moment of reckoning for many hedge funds may come at the end of this month, when their exposure to credit default swaps must be “marked to market” to reflect the increased obligations at the end of the third quarter. Olivant, the [...]
Week of September 16 WED: Overnight thoughts: If Morgan is considering a takeover, then Morgan is in trouble. And as LEH showed, the downward spiral is viscous. It has to fall. Think about it. All financial counterparties to MS are looking to eliminate risk as fast as possible. Whether MS is well capitalized or not [...]
