I recently spent a month camping on glaciers in Alaska near Denali. Usually the weather can be very bad. This year there was an unusual Omega Block of cold clear polar air that settled over Alaska keeping out all storms, clouds and snow. It pushed all the weather and storms south to California which had the wettest year in history. One of the issues in weather, as in trading, is timing. They knew the block would break but not when. It lasted over 6 weeks and then after a small storm reinstated for weeks more.

Trading patterns are complex like weather. A random sample can have long runs. Wykoffian blocking patterns undoubtedly can set up and last longer than many would expect. A question as with weather is whether the pressure gets diverted elsewhere. As stock meander in a range it seems like bonds have had some turbulence recently. I wonder if a similar dynamic is at work.

Jeff Watson writes: 

You correctly noted that the patterns can set up and last longer than one might expect. Carry trades last longer than one would think could be rational.





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