Part of this depends on which market you are talking about. If you trade the fixed income markets you have a ton of people who were stuck long before the fomc today. Todays meeting also probably started in motion a cycle of rate tightening. They might not raise rates in the next few months but they signaled a change in how the FED is leaning going forward and probably started the initial process of a shift in interest rates.
I'm adding to shorts...
- Thread starter trade-ya1
- Start date
Part of this depends on which market you are talking about. If you trade the fixed income markets you have a ton of people who were stuck long before the fomc today. Todays meeting also probably started in motion a cycle of rate tightening. They might not raise rates in the next few months but they signaled a change in how the FED is leaning going forward and probably started the initial process of a shift in interest rates.
Ok, the reason I ask is because I don't get any quotes beyond Sep 05 on TIFFE and Jun 05 on Simex (this is on Bloomberg). I just assumed no quotes = no liquidity at all, and I had no idea you could get trades off for March 08! Where are you getting your data from?
There is open interest back there, but I have not traded the product before so have no idea what kind of fills or prices to expect. Do the options trade much? I wouldn't mind really picking up a few of them.
I fully agree with you about the yield curve over there, I have some JGB shorts but the Euroyen looks potentially even more attractive. So far my personal favourite has to be Jun 05 - that's 1 1/2 years, enough for a nice recovery, and it's pricing in .25% rates. That is practically a free option!
Bloomberg will give you a quote, EYH8. I represent the entire open interest in the March '08 contract on SIMEX (myself and Fuji Bank on the other side), I'm short 500. You can find the entire quote chain at www.futuresource.com. I have no idea about the options, doubt they exist in the deffered months. I think June '05 is probably a decent choice. Liquidity is still low but you can get something done when you need to. March '08 is impossible (I'll hold it for many months if not years). Just a warning, the Japanese are tenacious bidders for this stuff (the Euroyen contracts in general). No idea why they hold in so solid. There is much more 'inside information' between the Japanese and the BOJ/MOF. However, I doubt the BOJ or MOF really knows what they are going to do out past a certain horizon. The contracts are about the same price as they were when the Nikkei was trading at 7500. Like you said, I'm treating them as if they were essentially options.
I think what Mecro is trying to say is that there indeed has been a ton of people here on ET that have been bucking the trend of the market and trying to pick a top ( doing absurd things like selling naked calls, etc ) from 1050 all the way up for the past 100 handles without any technical basis whatsoever.
For many of these people, the market just FEELS way to high to them, even though they have no factual basis or fundamental evidence to their belief. This is what Mecro has been taking issue with, and I believe that he is right about a lot of what he says in regards to the people that have been fighting the TREND of this market. It's true that many of them have no idea how a market trades coming out of a bear trend, whether it is 1982, 1987, 1990, 1998, or 2003. They have no idea what kind of multiple the S&P 500 has been trading at while coming out of a recession, nor do they have a clue as to where it could be trading at in 2004 with GDP, productivity, and profit levels that are going thru the roof like they are right now.
The market makes a powerful thrust off of an oversold condition, doesn't allow many people an "easy" entry point and as a result, it becomes too difficult for them to get in at a comfortable level. The market continues its powerful rally, not even coming close to violating any significant moving averages whatsoever and people continue to FEEL that the market is too high. Unable to get in comfortably they rationalize their way into shorting, and rationalize their inability to get long and ride the trend by shorting.
Today, the S&P's managed to finally break down below a couple of moving averages and the next thing you know, people are posting threads about a CRASH, and how they are gonna press their shorts. It's amazing how the psychology changes after going thru so much pain trading counter to the TREND, now reinforcing their belief that they are finally "right" about their shorts, THIS time!
Tell me, did anyone create a thread on the way up called, "The S&P is Bottoming" or "The S&P's Trend is Up"
Answer: No
Did the FED give the shorts an opportunity to finally make some money today?
Answer: Yes
Were any of these shorts short because they actually anticipated a change in the language of the FED today?
Answer: No freaking way!
:eek:
For many of these people, the market just FEELS way to high to them, even though they have no factual basis or fundamental evidence to their belief. This is what Mecro has been taking issue with, and I believe that he is right about a lot of what he says in regards to the people that have been fighting the TREND of this market. It's true that many of them have no idea how a market trades coming out of a bear trend, whether it is 1982, 1987, 1990, 1998, or 2003. They have no idea what kind of multiple the S&P 500 has been trading at while coming out of a recession, nor do they have a clue as to where it could be trading at in 2004 with GDP, productivity, and profit levels that are going thru the roof like they are right now.
The market makes a powerful thrust off of an oversold condition, doesn't allow many people an "easy" entry point and as a result, it becomes too difficult for them to get in at a comfortable level. The market continues its powerful rally, not even coming close to violating any significant moving averages whatsoever and people continue to FEEL that the market is too high. Unable to get in comfortably they rationalize their way into shorting, and rationalize their inability to get long and ride the trend by shorting.
Today, the S&P's managed to finally break down below a couple of moving averages and the next thing you know, people are posting threads about a CRASH, and how they are gonna press their shorts. It's amazing how the psychology changes after going thru so much pain trading counter to the TREND, now reinforcing their belief that they are finally "right" about their shorts, THIS time!
Tell me, did anyone create a thread on the way up called, "The S&P is Bottoming" or "The S&P's Trend is Up"
Answer: No
Did the FED give the shorts an opportunity to finally make some money today?
Answer: Yes
Were any of these shorts short because they actually anticipated a change in the language of the FED today?
Answer: No freaking way!
:eek:
Funniest thing I've heard all day.
Oh ok, I understand. You can generalize me into the buy and hold perpetual bulls but when I flip the script you reply with quick defenses of your trading style and light insults about my reading comprehension. Humorous indeed.
trade-ya:
You do not trade equities intraday. If you did, you would the amounts of massive shorts established by whoever it is. It could be smart money or it could be funds. I'm sure there are some big retail clients establishing 10k+ blocks of shorts. Bottom line, they are out there. This isn't 1999, not even close to it. Even half the speakers on CNBC are talking about going short and have been for months. And unlike 1999, CNBC hosts are not laughing at them anymore.
Check out the put call ratios for popular stocks and indices. It's not like everyone is buying calls. Many many puts out there. It's about 1:1.
Personally, I do not think mom & pop have even truly entered the market. Neither have all of the institutions. There is still a lot of money on the sidelines. There are also the foreign investors that left the market as it was bottoming out. Who knows if they will come back or not.
Ever since this rally started almost a year ago, I've been saying it's just BS and a cheap money bubble. I still think the same. But look what happened to all the contrarians trying to short it.
I hear ya waggie, but hey, if you're gonna go short, you might as well do it when we're breaking highs over and over, rather than 10% lower (where the trend finally "breaks") with very wide stops (which I'm uncomfortable with using). Sure shorts have been burned repeatedly, but I'd rather lose a little each time than have to chase the market down.
And what happens if the market finally goes down 10%? All the technical traders would turn bearish and wait for the first bounce to short. But what if there is no decent bounce? I know that I wouldn't have the confidence in the same short if I pulled the trigger much lower from here, and I'd most likely get stopped out quite easily.
You're right in that no one knew what the Fed would say today, but when you think about it, the market (if it was set up for it) could have easily rallied hard on anything they've said ("higher rates are the surest sign of a recovering economy" etc). IMO, the market was setup to selloff or at least churn a bit on just about any reasonably possible statement from the Fed, so you can give us shorts a little more credit than blind luck
And what happens if the market finally goes down 10%? All the technical traders would turn bearish and wait for the first bounce to short. But what if there is no decent bounce? I know that I wouldn't have the confidence in the same short if I pulled the trigger much lower from here, and I'd most likely get stopped out quite easily.
You're right in that no one knew what the Fed would say today, but when you think about it, the market (if it was set up for it) could have easily rallied hard on anything they've said ("higher rates are the surest sign of a recovering economy" etc). IMO, the market was setup to selloff or at least churn a bit on just about any reasonably possible statement from the Fed, so you can give us shorts a little more credit than blind luck