Oil beginning to threaten SIFs

[nitro]

This is not as strong as I thought it would be. Granted, there are two and a half hours left in the day. Still...

I went back to yesterday, and it looks like at least some of todays move was priced in yesterday. It appears that rumors were everywhere that the FED may cut rates. Hard to say. For evidence, look at some of the monster move in financials.

Options expiration may have muted the day somewhat also. All I see is IV of puts going higher, not calls, and that is backwards. Option markets belive there is more downside. VIX very deceiving today...

People are saying this is not the same thing as a rate cut. But to me, it is that the FED has now openly acknowledged the problem, that is far more important than the window rate cut (although the YC has steepened). The only arsenal left in it's bag of tricks at this point is an actual cut, and imo that is now imminent, and just a question of when, not if.

NQ should be much stronger imo. Easily +40.

nitro

 

[moo]

Quote from nitro:

NQ should be much stronger imo. Easily +40.

nitro

NQ ended up +33... not enough? What did you expect?

I see a low yesterday that's going to last for a while, but also can't imagine SP crossing 1500 anymore. So perhaps this wild volatility continues in that 100+ point range?

I wonder if the timing of the Fed action was intended just to save the put-selling dealers and hedge funds, whose positions were going into expiration deeply underwater.

 

[nitro]

Quote from moo:

NQ ended up +33... not enough? What did you expect?

I expected a far stronger move. Intraday NQ was +40 a few minutes before the SIFs close. Of course, one has to see the move from premarket levels. On that scale, the move was 55+ handles on NQ. But SIFs closed on a downtick. I have not checked whether they went out below/above fair value.

I see a low yesterday that's going to last for a while, but also can't imagine SP crossing 1500 anymore. So perhaps this wild volatility continues in that 100+ point range?

100 pt ranges seem the norm until we get past the credit problems. From what I can see, options markets are predicting another volatile day by the way they are pricing front month puts vs calls, or at least they are making you pay to play that opportunity. Options players are sharp...

I have no opinon on where it goes short term. All I have a feel for is how SIFs should react on a daily basis based on the news or lack of that day. That said, assuming the credit worries don't get worse, I see no reason for an SPX very close to 1600 by year end. That's approx 150 handles from here. If the FED cuts rates, that number goes higher. If the FED removes liquidity as market stabilizes, it may fall well short of 1600 SPX. As I have stated before in this thread, the one thing that will change my mind on 1600 SPX by year end is a close below 1400 SPX on the daily. In that case, anything goes. Until that happens, the logic of the charts is to buy massive selloffs that are liquidity driven, and to aggressively buy any move higher on momentum. If SIFs go through the unch line from green and go red intraday, stop exit longs. Otherwise stay aside or stay the course if you are an investor and are not a trader.

I wonder if the timing of the Fed action was intended just to save the put-selling dealers and hedge funds, whose positions were going into expiration deeply underwater.

I have never made a study of whether the FED leverages market timing to accentuate it's efforts. I doubt it, I think it is just coincidence that they acted on expiration day.

nitro

 

[nitro]

In case we haven't noticed, trading ES is very tough the last couple of days, but NQ is as easy as pie. As expected.

nitro

 

[SethArb]

in case nobody has noticed

this week oil and gas stopped moving up

 

[nitro]

I noticed. That is inspite of a hurricane that could have been potentially catastrophic.

As I pointed out earlier in this thread, IMO QM is probably done for the year until the northern hemispheres winter. I expect QM to drift towards $60 slowly.

nitro

 

[nitro]

Third day in a row 1450 ES settle. Spooky....

nitro

 

[dhpar]

Quote from nitro:

I noticed. That is inspite of a hurricane that could have been potentially catastrophic.

As I pointed out earlier in this thread, IMO QM is probably done for the year until the northern hemispheres winter. I expect QM to drift towards $60 slowly.

nitro

ok - I take opposite side of the bet. We will see 80 before 60 (say on Dec contract). The reason is a tight supply + Jet is too north due to La Nina effects, i.e. more hurricanes into the Gulf (if they come). In fact I changed my position today to long CL - fingers crossed.
Only with Dean we lost 10mm barrels easy - where will we get it from?

 

[number22]

Quote from dhpar:

ok - I take opposite side of the bet. We will see 80 before 60 (say on Dec contract). The reason is a tight supply +

Just keep in mind that fed has the abilities to push the oil price down further if it choose to.

There is a lot of uncertainty build in the oil; one thing i don't like is that people bet on the weather pattern.

Good luck.

 

[dhpar]

Quote from number22:

Just keep in mind that fed has the abilities to push the oil price down further if it choose to.

There is a lot of uncertainty build in the oil; one thing i don't like is that people bet on the weather pattern.

Good luck.

energy is always partly a weather related bet - but with good fundamentals you are playing good odds...

i do not understand the sentence about fed at all - in fact that sounds like outright nonsense. can you please explain?