Kudos to MMs

[nitro]

I think you misunderstand my commenting on gold. I don't necessarily comment on it because it affects (my) equity trading, I mention it because imo, people misuse it as a heding vehicle for their equity trading.

Copper, oil, aluminum, palladium, wheat, etc are better "hedges" in their diversified portfolio. Finally, I think traders should sell the living daylights out of that thing, certainly at 980, and probably now until it starts to get closer to technical support.

I mean no harm. It is just that it doesn't fit my pea sized brain as to why some shinny yellow metal is worth anything (except it's use in jewlery) other than in people's minds

Quote from trefoil:

I figured I should post what happened to me since I opened my yap earlier: while I was nicely profitable the day after, and that day earned me most of my profits this week, it was a lot harder than I thought it would be.
So much for easy setups. As you note, gold has been tightly range bound for quite some time. Sooner or later it'll break out again, in some definite direction, but for now, it's a sideways crawl.
Of course, Iran is threatening to blow bigtime as I write this, so Monday might yet prove interesting.
But thinking about it, you probably should just not comment on the gold market. You're right that its relevance to the stock market is tangential, at best. Its relationship is indirect, through currencies and commodities. Correlation with stocks, negative or positive, is only high in times of crisis.

 

[trefoil]

Quote from nitro:

I think you misunderstand my commenting on gold. I don't necessarily comment on it because it affects (my) equity trading, I mention it because imo, people misuse it as a heding vehicle for their equity trading.

Copper, oil, aluminum, palladium, wheat, etc are better "hedges" in their diversified portfolio. Finally, I think traders should sell the living daylights out of that thing, certainly at 980, and probably now until it starts to get closer to technical support.

I mean no harm. It is just that it doesn't fit my pea sized brain as to why some shinny yellow metal is worth anything (except it's use in jewlery) other than in people's minds

I think you misunderstand me too, as I actually agree with you that people who use it as a hedge for equity trading are misguided. That's what I was trying to say by saying that its correlation is only high in times of crisis. Note that, as far as I can tell, its not an effective hedge because the correlation can be either positive or negative, and there's no way of knowing ahead of time which way the correlation will go if there's a crisis.
Also, I agree it's pretty much useless. Strangely, that's what makes it so investable. But it would take me a long time to explain that logic, so we'll just let that one go.

 

[nitro]

Quote from trefoil:

I think you misunderstand me too, as I actually agree with you that people who use it as a hedge for equity trading are misguided. That's what I was trying to say by saying that its correlation is only high in times of crisis. Note that, as far as I can tell, its not an effective hedge because the correlation can be either positive or negative, and there's no way of knowing ahead of time which way the correlation will go if there's a crisis.
Also, I agree it's pretty much useless. Strangely, that's what makes it so investable. But it would take me a long time to explain that logic, so we'll just let that one go.

Ah, ok I understand.

 

[nitro]

"FV" ~ 870

News: nothing

IRs: 3 and 6 month bill auctions. 4-week announcement.

Oil futures getting wacked. Almost down 3% as I write this. Dollar strength is the culprit.

Gold futures are cooperating with other commodities on the way down, but not on the way up. That is a great trading vehicle if you are short.

900 - 905 minor support. 878 and 872 are the only real attractors near here to downside.

 

[Sushi]

Short?

 

[nitro]

"FV" ~880

News: part one of two FOMC meetings begin, ICSC Goldman sales, Redbook, Existing home sales, State Street investor confidence index.

IRs: 4-week bill auction, 2-year note auction.

Oil futures red/flat pre-market with SIFs green, but hat is mostly due to a different front month contract as of today. OIH has minor support 92.50, and strong support 87.50 ish.

Gold futures have the feeling of "hanging around" waiting for something to happen.

Markets likely to hover around here until FOMC decision tomorrow. Other news may perturb SPX, but it is probably 98 delta of a close between 878 and 900. Notice that we are back to nearly zero mathematical edge to either side, but short term 878, 872 attractors have the momentum.

 

[Daal]

Still thinking the Fed will pull the trigger within 6 months?

Here's a Bernanke speech to Greenspan in 2003. This particular part makes me convinced there will no hike in the next 12 months probably longer

http://online.wsj.com/article/SB124571683373339299.html

"First, those on the Street and elsewhere who lately have been worrying about inflation have tended to point primarily to raw materials prices, which have been rising, and to the dollar, which has been falling. Here I will largely reiterate some things that [Fed staffer] Dave Stockton said. The Board staff's Monday briefing, which I believe has been posted electronically, debunked the importance of the raw materials argument quite convincingly in my view.

The briefing includes a graph of the historical data, which shows that even very large movements of raw materials prices -- which are quite common by the way -- appear to have muted effects on intermediate goods prices and, most important, no discernible effects at all on final goods inflation. Presumably this lack of inflationary impact reflects the fact that raw materials are only a small part of total costs. As another figure in the briefing showed, unit labor costs -- which, of course, have been falling rapidly as productivity has surged and wage growth has slowed -- are far more important in inflation determination than are materials prices."

 

[Daal]

If Bernanke is fired Obama will put a bigger dove in(although it wont be easy to find one)

 

[nitro]

Right,

Your point is that Bernanke only cares about one type of inflation, rising wage inflation, and that has almost no chance of happening for a good year+.

I realize this. But while you keep saying this, you fail to hear what I am saying (perhaps because I am being less than clear.) What I am saying is twofold:

1) Bernanke's FED will likely fail to raise rates promptly because like Greenspan failed to see, he will see no inflation using his blunt tools. (Or maybe he doesn't believe it is his/FED mandate to allay bubbles.)

2) It won't matter because the bond market will demand higher rates, and it is these rates that the market trades on day to day.

Further, while I agree with that 1) above is the likely result of this FED, like Greenspan, this stance of cheap money will once again create another bubble somewhere, once again creating devastation for some economy.

Quote from Daal:

Still thinking the Fed will pull the trigger within 6 months?

Here's a Bernanke speech to Greenspan in 2003. This particular part makes me convinced there will no hike in the next 12 months probably longer

http://online.wsj.com/article/SB124571683373339299.html

"First, those on the Street and elsewhere who lately have been worrying about inflation have tended to point primarily to raw materials prices, which have been rising, and to the dollar, which has been falling. Here I will largely reiterate some things that [Fed staffer] Dave Stockton said. The Board staff's Monday briefing, which I believe has been posted electronically, debunked the importance of the raw materials argument quite convincingly in my view.

The briefing includes a graph of the historical data, which shows that even very large movements of raw materials prices -- which are quite common by the way -- appear to have muted effects on intermediate goods prices and, most important, no discernible effects at all on final goods inflation. Presumably this lack of inflationary impact reflects the fact that raw materials are only a small part of total costs. As another figure in the briefing showed, unit labor costs -- which, of course, have been falling rapidly as productivity has surged and wage growth has slowed -- are far more important in inflation determination than are materials prices."

 

[Daal]

Quote from nitro:

Right,

Your point is that Bernanke only cares about one type of inflation, rising wage inflation, and that has almost no chance of happening for a good year+.

I realize this. But while you keep saying this, you fail to hear what I am saying (perhaps because I am being less than clear.) What I am saying is twofold:

1) Bernanke's FED will likely fail to raise rates because like Greenspan failed to do because he will see no inflation using his blunt tools.

2) It won't matter because the bond market will demand higher rates, and it is these rates that the market trades on day to day.

Further, while I agree with that 1) above is the likely result of this FED, once again like Greenspan, this stance of easy credit will once again create another bubble somewhere, once again creating devastation for someone.

Then I suppose we are on the same page. Since I'm speculating on fed futures I'm not very concerned about long-term rates and worries about exit strategy, I accept that bernanke will overdo easing, thats why I was amazed when fed futures tumbled, I loaded up there, I should have bought more though