Jul

27

 If the financial Armageddon does happen this week it will be the most well forecasted one in history. Now CME raising bond futures margins in anticipation of increase volatility and declines in bonds. While actual volatility for bonds around 10% roughly where it has been all year and well below say last December, and if I am not mistaken Nas 100 is just off 10 year highs.

Gary Rogan adds:

Speculation about what the "stubborn" conservative Congressmen "need" to "do the right thing" and "compromise" has reached a fever pitch. So many cannot understand why the markets are oblivious to the obvious failure to capitulate and are not providing the necessary pressure to avoid "the terrible fate of default". The best way I heard it put on a radio program full of "thoughtful" independents and liberals is "Why would they seek the safety of a bomb shelter if the bombs are not falling?" 


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6 Comments so far

  1. Tom on July 27, 2011 10:51 am

    “I think we are going to hold this 37-40 area on ES and ensure we close negative with some follow through tomorrow / Wednesday. Should be enough to ruffle some feathers.”

    High was at 40.25 a few hours later. I suspect we have done the necessary ruffling, and that the 07-10 area today was an excellent place to close shorts. ES now 13 bid, and if any DS readers are not fully cured of “tip taking” then I trust they are happy with the 25 points.

    Sometimes the market is very obvious - earlier this week was a good example - it is at those times when I am most wary as it is almost too obvious. This drop has been hyped so much that I’m convinced that a move above 1360 is on the cards in the next few weeks, so fast that the bears won’t know what hit them.

  2. david on July 27, 2011 2:41 pm

    An ounce of prevention is worth a pound of cure. I wonder how the CME intends to profit from that?

  3. david on July 27, 2011 3:22 pm

    @Tom…to me markets always go lower than one anticipates. So 1300 is better place to close shorts than 1310, talk about squeezing the rock for that last drop. And going back to 1360 sounds cool, makes one lean that way with gold taking a nice dip also today 7/27, wondering if the smart money is exiting long positions in gold to buy cheap snp……..why they always seem to hit two home runs a game…?!?

  4. Tom on July 27, 2011 5:10 pm

    @David - you are quite correct about falling further than we expect, although in this condition one is wary however of sudden bear squeezes. I have not forgotten how the government changed the rules in September 2008. A nice short trade indeed - I left the last ten points to traders more skilled than I am at reading bottoms. I suspect a surprise is in store tomorrow.

  5. david on July 29, 2011 8:11 am

    Add a little bad economic news to the debt limit battle where there’s not deal if it ain’t obama’s deal makes that 200dma on the snp look like a done deal. Just curious Tom, do you believe in stop losses?

  6. duncan on July 29, 2011 2:50 pm

    astounding move in the long bond up 2 points on the risk of default, the exact opposite of what one would expect at the high for the year. It will take a creative mind to craft a story for this one.

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