Tuesday, 28 October 2014

And all is back to normal Again

You wouldn't believe we were trading low 1800s in the ES two weeks ago, but that week aside the market has slotted back into the standard theme of the year which is buy any dip, low volume, not much volatility. Seems like the market has gone very flat while waiting for the big event, Wednesdays FOMC meeting, which is likely to bring about more of the same rhetoric fueling more gains as long period of Easy Policy will remain despite the likely finishing of the QE program.
As far as STIRs go, Short Sterling Spreads are almost back to where they were before the initial fall, so my initial Strategy in buying all the way down worked out well, but now I'm in a spot of bother as I have Shorted a bit too early and quite a bit under water on this, and what makes things worse is since the switch to ICE exchange it seems as though the volume has totally died out, with the recent volume rivaling the super low volume of the Euribor, and this on days where we had BoE minutes and UK GDP. So its a matter of being patient on this trade right now, and hoping for some pullback.

Going forward its more green this morning and it doesn't seem like the bears have anything on the Bulls at the moment, as the 7 to 8% rally since the lows of two weeks has hardly been challenged, and doesn't look like it will be challenged as Nasdaq is within 2% of a Year highs and ES just over 2% from year highs. European Indices remain much more pressured, but will be brought up along with the US markets despite with a bit more volatility I assume.  

Wednesday, 22 October 2014

1 Week Later...

Looking at the way this market is right now, you would have thought last week didn't mean anything. After crashing down Equities have crashed back up, with the ES posting 3 back to back 1% plus gains which is the first time since 2011 this has happened, and the VIX index has dropped over 10% in each of the past 3 days which has never happened in the history of the VIX.
So the buy the dippers are out in force, and it is safe to say this was the pullback everyone was waiting for and soon as support was found it has raced up super fast.
The FED and other Central Banks are still throwing around QE rhetoric, and with China growth sluggish, the PBOC are looking at further rate cuts, so as the economies around the world remain sluggish, this is the best conditions for the US markets as they continue their rapid accent to new highs. European Indexes are still way off their highs and are reliant on more from the ECB to push it higher.

When the day comes that central banks do have to unwind, it will be a real test to the market!
Bonds have come of their highs as the correlation with Equities seems to be the best its been in a while, Spreads have come back in Short Sterling and Eurodollar also and is now sitting mid range, which is making it a bit tougher to pick direction.
We have BoE minutes later today, as well as US CPI, so looking for that to bring some volatility to the mix.
Main event for the week is the UK GDP figures on friday, so hoping to get flat before that.

Wednesday, 15 October 2014

Brutal Day!

So yesterday wasn't for the weak minded. After years of slow upwards grind the ever stretching market snapped, with the Bonds hitting record highs in the process and the Equities having wild swings. The Short Sterling 1 year spread collapsed 16 ticks, which kinda hurt, but I've stayed small enough to try average my way out of it, and personally I think that on days like yesterday you get big overshoots and so when the dust settles slightly we will get a bit of a correction in the yields, cause while data in Europe isn't the greatest, Europe has been sluggish for years but it was simply a matter of how much can you rally on easy policy if you don't have the fundamentals to back it up.
If the market was more two sided from the outset you wouldn't have got this kind of reaction, but then again that requires rationality, and generally the market has a herd like mentality.
The 10yr had a 2 full point move on the US Cash Equity open, and the 30yr had a 3 point move, which suggests a big liquidation of some kind.

Another strategy that has been widely used and seriously got put to the test was option premium selling. Myself along with countless others doing this trade which had been working for years got taken to the cleaners, and it just shows always respect the market, and don't over leverage your account. Cause a margin call is the worst call you'll want to receive, It will take me a bit of time to make back some of the losses i made yesterday but on a positive not, volatility is back, and things are moving, so time to put your day trading skills to work!

Monday, 13 October 2014

Equities got a right beating!

Its been a wild few days in the Equity markets worldwide. From a position where we barely have had any 1% moves this whole year, to having them on a regular occurrence. This move was inevitable as the markets were too overstretched, but while central Banks continue to maintain super accommodative policy the risk for a melt down style move remain, as there is only so much yield chasing that can be done.
Either way it will be interesting around these levels, as I think there is still more downside to go but it will be very volatile, which will give some good opportunities for day traders, which is a good thing, since its been a crap day traders market this year.
My one real annoyance, is that I have had some kind of short in Index position for the best part of 7 or 8 months via options, and apart from being long VIX, I pretty much haven't benefited from the move down which is very frustrating, as its sods law that the move happens when you don't have your position on. But thats trading for you, the silver lining was the fact that I was long Corn and took nice profits on it although I got out way too early, and left a lot on the table.
Going forward I'm getting long Short Sterling Spreads on the this flattening that has occurred, and will keep adding to my position if it continues to go down, and generally try to get stuck into some of the volatility in these Indices.

Monday, 6 October 2014

NFP beat helps rally Equities

So it is back to business as usual as the Equities rallied strongly friday afternoon after a bit of a mixed week. Euro Indices came of quite strong with the Dax pushing 9200, FTSE 100 testing 6400 and the EuroStoxx testing 3100. The US indices have come off relatively less, but now are in mid range territory from high to recent low. I feel like there is a bit more resistance then usual as the markets are likely to consolidate, however the plunge in the VIX on friday might suggest a bit more upside to come.
Euro Indices are likely to remain under more pressure as data coming out has not been good and this mornings German Factory orders was a big miss. This coupled with the fact that the ECB is staying put with its current program suggests there is limited upside for now.
Not much to report on the Bond front, I'm using pullbacks in Short Sterling Spreads to go long, and the same with Eurodollar and Euribor Spreads.
I still remain long corn, hoping for a bit more of a move to get out, ideally above 3300.

Short Sterling spreads nudge higher on hawkish Fed; Walmart blowout

As most must know trading Short Sterling is a bit of a bore, and has been for a while. Having managed to get out of my 2 month hold before,...