Oil beginning to threaten SIFs

IMO the Bush bailout plan should send the markets ballistic tomorrow, that is, if the overnight session doesn't get there first. All of the size we have to get through are gamma programs hedging option risk. At some point (1475 ?) those programs implode.

As far as individual stocks, that will be very interesting to see what goes up 5% tomorrow.

nitro
 
FFFs probably implode tomorrow. The mess that is going to have to be unwound. Sell (short end of curve) bonds, buy SIFs. The dollar should show nice gains against the Yen and the EUR.

Fasten your seat belts, it is going to be mayhem.

nitro
 
The day was more muted than I thought it would be. It does not look like any of this was leaked, so the days gains are the days gains.

Hard to say really. It is as if the "prize" the market wants is the rate cut. While the FED may cut, and as I have stated I thought they would, it looks like it is going to take one more wave of credit related events for the cut. The message the FED is sending is clear: we will cut the rate in this environment only in the extreme last resort.

Be wary of using FFFs to gauge what the FED will do the next two weeks. Read Stigum.

http://www.amazon.com/Stigums-Money-Market-Marcia-Stigum/dp/0071448454

nitro
 
Quote from number22:

Got out my GOLD position a bit of earlier and starting bearish on Gold.
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My ex wife is one of these gold bugs that thinks gold goes easily to $800, and then beyond.

Gold is a very strange commodity. FWIW, if you are going to trade gold, I suggest you read an article (you'll know which one) in the current Futures magazine, the only one of these magazines that I think everyone should read regularly.

If the FED doesn't cut rates, long gold here is suicide imo. If the FED cuts, gold will probably take out upper resistance. As you will learn from that article, knowing the price of gold in yen is important.

Longer term (2 year time frame), I don't 't see what can stop gold from taking out all time highs. But just like I believe oil goes to low 60s, I think gold retraces to low 600s in the short term.

I don't see how the FED can cut rates on the Sep 18th meeting. Not too far beyond that meeting it will likely happen tho...


nitro
 
Commodities are hot today. Strange as it may seem, wheat may have something to do with it, as it was locked limit yesterday. Hard to believe everyone thinks a rate cut is essentially a done deal...?

Strange the relationships...

nitro
 
no hikes from fed + more inflation coming through oil/foods/liquidity/etc = gold can go only up up up. I am waiting with my long position for years now...

p.s. closing on my $80 target for oil :) - let's see how it goes
 
Got been caution in shorting gold at current level; however; it will depend on fed decisions.

I think someone has tried to corner the gold market then dump it before fed meeting.

Every day; I have seen data are not bearish on the whole economy; and remembering that last fed meeting was concerning about inflation and economy outlook.

I will not surprise that fed and treasury suddenly support the strong USD position.
 
IMO a very difficult market from a trading standpoint.

While everyone expects a rate cut from the FED, I am not sure that makes any difference anymore in the short term.

If indeed we are going into a recession, then how can FED cuts help in the short term? All these cuts are felt six to nine months after they are instituted. I am no longer sure how markets will react on the FED cut, since it is already priced in.

It is soooo difficult because at least technically, until we close below 1400 SPX, imo we should be buyers of equities. But that leaves 55 handles to the downside to be defensive. Lots of air pockets between here and 1400 SPX.

Markets will probably be defensive until tomorrow when Bernanke speaks, and probably the whole week.

nitro
 
Quote from nitro:

...But just like I believe oil goes to low 60s, I...


nitro
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Uh, I need to turn the charts upside down on this one.

Could it be that commodities are reacting/leading the "done deal" Fed cut(s)? Sure looks that way, and the message is clear - a cut is inflationary because the problems with the economy are confined to a sector, albeit an incredibly important sector.

Oil at all time highs.

nitro :(
 
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