Kudos to MMs

nitro · Oct 6, 2009

Quote from Daal:

With regards to the unemployment rate I disagree it will come down in that time period. the 90-91 credit crunch lead to one of the most sluggish job recoveries on record, this time around it looks like it will happen again as the Fed Senion Loan Survey is showing banks arent lending
http://macrospeculations.blogspot.com/2009/06/credit-crunch.html

Banks aren't lending because they have been forced to delever. I think Greenspan analysis is incorrect.

-stocks are up nearly 60% in 7 months
This Fed was cutting back when ES was at 1500, slight off the all-time highs, this doesnt seem to drive their decisions

You are missing my point. That the FED raises or lower IRs is not the issue, I am asking YOU if you think this is a deflationary environment given all the evidence.

-oil at $70
they look at the core CPI/core PCE mainly, hence 2% rates at $147 oil and QE with $70 oil

-health care, education costs
they are rising no doubt but the fed has to look at all costs, as expressed by the core CPI and it went from 2.5%yoy to 1.5% and it should decline more as that chart shows

See comment above.

Daal · Oct 6, 2009

Quote from nitro:

You are missing my point. That the FED raises or lower IRs is not the issue, I am asking YOU if you think this is a deflationary environment given all the evidence.

I do believe its a deflationary enviroment, due
-CPI is negative(commodities are down big yoy)
-Labor costs are falling, this is the worst labor market since the 30's. the UR is actually masking the fact that people are dropping out of the labor force because they cant find jobs(if they didnt the rate would be quite higher)
-Bank credit is not growing and they arent lending
-The equity rally is a speculative boom, the Nikkei had 4 50% rallies since Japan went bust. So they dont mean much
-The money supply(M2) is not growing and since banks are zombified its not likely to growth unless the fed increases the QE
-Consumers are constrained with their psychology affected, demand will be weak
-Commodity price 'pass-through'(the amount that will show up to consumer prices) was 22% in the last expansion(IIRC) so lots of commodity inflation gets eaten up by the corporate sector(margins get hurt) and it doesnt become inflation, essentially usually the PPI goes up more than the CPI, which helps consumers
-Same margin thing with the weak dollar

nitro · Oct 7, 2009

"FV" ~877

nitro · Oct 8, 2009

"FV" ~877

nitro · Oct 8, 2009

Strong chance of going long the ATMF "straddle" today in SPX (use ES options if you don't have the means to a floor broker at the CBOE).

Note well: There is a holiday Monday. That means decay is horrible this weekend for just about anything long gamma. On the other hand, next week since there are only four trading days could see accelerated upside move, and in addition it is a shortened expiration week.

riskfreetrading · Oct 8, 2009

Quote from nitro:

On the other hand, next week since there are only four trading days could see accelerated upside move.

The other way around. My models say down.

Started shorting Qs at 42.44. Just added at 42.60, two minutes ago.

nitro · Oct 8, 2009

Take note of the greatest concentration of open interest in the Oct SPX contract:

http://www.cboe.com/DelayedQuote/QuoteTable.aspx

Closing below 1070/1075 ish does optimal damage:

nitro · Oct 8, 2009

Quote from riskfreetrading:

The other way around. My models say down.

Either way long gamma wins as long as it moves.

Started shorting Qs at 42.44. Just added at 42.60, two minutes ago.

Too soon imo.

nitro · Oct 8, 2009

Long ATMF "straddle" leaned toward short side with ES at 1064.

I don't make much if this continues higher, but I break even easier to the upside on theta, and if we lose at least 1 STD to the downside, and then move from there in either direction, I make.

riskfreetrading · Oct 8, 2009

Quote from riskfreetrading:

The other way around. My models say down.

Started shorting Qs at 42.44. Just added at 42.60, two minutes ago.

42.60 was the exact top. Qs are now at 42.30. Time to take some profits!

I started a thread when price was at today's high to share the shorting information, but mods made it disappear and the crowd was insulting because I wrote I am shorting. When the crowd and the mod sare against a poster, that is good sign for a top/bottom.