Black Monday Oct 31, 2011
- Thread starter nitro
- Start date
Note the smart money back in July. Italy by itself is able to drive SPX to 1000. Italy + Spain + Portugal, well, the situation is extremely grave. Those dominoes are not even in play yet.
For those that are short, be aware that structurally, the [US] markets have an upward bias for at least two weeks, so your only edge is headline risk. But what an edge it is.
"Spain Yields Rise in Auction; Triple-As Under Pressure"
http://www.cnbc.com/id/45300714
This is reaching a grave phase. Futures are down mildly, but they may sell off considerably when we are fully open. 1220 a very strong attractor. By very rough OFV premarket computation, SPX should be trading at 1240 ish if we were open, which would put futures at about 1235 ish.
The bias continues to be higher, but these headlines of the European union coming apart at the seams are extremely dangerous, even into a long bias.
http://www.cnbc.com/id/45300714
This is reaching a grave phase. Futures are down mildly, but they may sell off considerably when we are fully open. 1220 a very strong attractor. By very rough OFV premarket computation, SPX should be trading at 1240 ish if we were open, which would put futures at about 1235 ish.
The bias continues to be higher, but these headlines of the European union coming apart at the seams are extremely dangerous, even into a long bias.
You are aware that in the last couple of weeks (4-5) tons of tail risk hedges went over the counters? Implied vola for all asset claases exploded exponentially. Usually, if 95% of braniacs at buy side shops are bying protection, Wall Street is saying "Thank you, have a nice day". Shouldn´t be different these days.
By the way: Europe is seeing the end of the bond risk premium adjustments.
I think that finally sovereign debt in Europe is "fairly" priced and governments have "understood" the message. Did you read 10 days ago that EU´s debt/GDP ratio next year will fall a couple of percentage points.
It would be very interesting were the shortage of "bond paper" and excessive cash institutional players are sitting on is going to be invested? Into highly priced "AAA" safe haven bonds? LOL! Good luck with that.
At one point institutionals will run out of their "fear mongering" boxes because they have missed the upcoming rally.
Thanks for the information. Do you have a link to the risk hedges you can post here?
Market Makers aren't taking sides. They sell the stuff with a spread, then hedge and let their traders manage second to second risk. That means nothing to me.
Fairly priced? The trend is higher, with every indication that 7% cannot be contained in Italy. Spain risk is now under the microscope, with Portugal imminent. If it spreads to France, game over.
I am now of the mind that you can't have a monetary union without the rest of the glue. It is as if every state in the US was under the dollar, but nothing else tied us together. It won't work, imo.
Market Makers aren't taking sides. They sell the stuff with a spread, then hedge and let their traders manage second to second risk. That means nothing to me.
Fairly priced? The trend is higher, with every indication that 7% cannot be contained in Italy. Spain risk is now under the microscope, with Portugal imminent. If it spreads to France, game over.
I am now of the mind that you can't have a monetary union without the rest of the glue. It is as if every state in the US was under the dollar, but nothing else tied us together. It won't work, imo.
