its amazing we have had 2 down days basically off the highs 2 weeks ago and people act like we've crashed to hell. we've only given back 1/3 of the 7 month run lets see what happens at the pt of giving 1/2 back
not cool Symbol Name Last Trade Change Related Info^AORD All Ordinaries 5,711.30 6:35PM ET Down 63.90 (1.11%)
why did ES open so high? 1387, and then down 4 points within 2 minutes... does this happen often.. i mean it was pretty clear that "real" price would be lower... just big buy order at open? market inefficient at these times?
we may drop again Monday (gap down) and even more during the day, but looking at VIX and put/call ratios it seems it is starting to get into "overdone" territory. A bounce is called for based on how everyone is leaning. Remember bounces in down markets can be ferocious as shorts scramble to cover. But i am seeing too many issues starting to crop up e.g. inflation worries, housing, subprimes, crude oil etc. I don't think rallies will last much http://lauristonletter.blogspot.com/
Any rallies will be quickly sold off. Massive money flow into treasuries. People don't want ANY risk. This is extremely bearish. Treasuries Post Biggest Weekly Gain Since September on Safety By Deborah Finestone and Elizabeth Stanton http://www.bloomberg.com/apps/news?pid=20601009&sid=a86NqV7e6l2M&refer=bonds March 3 (Bloomberg) -- Treasury benchmark 10-year notes posted their biggest weekly gains in five months as investors sought the safety of government debt amid declines in global stocks and concern that U.S. economic growth is slowing. Ten-year note yields dropped to the lowest since December as a plunge in stock markets in Asia, Europe and the U.S. wiped out more than $1.5 trillion from the value of global equities. The premium investors demand to own high-yield, high-risk corporate bonds and emerging market debt over Treasuries rose. ``People woke up and thought about risks they've been taking,'' said Henley Smith, fixed income manager at Castleton Partners in New York. ``As a result, Treasuries are moving up.'' The price of the 4 5/8 percent security due in February 2017 rose 1 12/32, or $13.75 per $1,000 face value, to 101, according to bond broker Cantor Fitzgerald LP. The yield fell 17 basis points, or 0.17 percentage point, to 4.50 percent, the biggest weekly drop since the five days ended Sept. 22. Two-year note yields fell almost 28 basis points to 4.53 percent, the biggest weekly drop since September 2005. The yield premium the securities paid over 10-year notes narrowed to 3 basis points, the narrowest since October. ``We've had more flowing into the front-end, where flight- to-quality money usually goes,'' said George Adell, a strategist at Philadelphia-based Commerce Capital Markets Inc. Swap Spreads Proposed regulatory changes in the Chinese equity markets sparked a rout stocks worldwide as investors became risk averse. U.S. stocks posted their worst week in four years, erasing all of the gains for 2007 on Dow Jones Industrial Average, Standard & Poor's 500 Index and the Nasdaq Composite Index. ``The world looks perilous at this hour and Treasuries are benefiting,'' said William Hornbarger, chief fixed-income strategist at A.G. Edwards & Sons Inc. in St. Louis. ``The concept of risk reduction'' is boosting demand for Treasuries. In one indication a flight from riskier assets is fueling demand for Treasuries, the so-called swap spread, a measure of what companies pay to borrow, rose this week. The 10-year swap spread traded at 56.3 basis points yesterday, the highest intraday level since August, and compared with 52.8 basis points on Jan. 29. ``Swap spreads remain wide, which is telling us that flight to quality is still in full force,'' said James Caron, head of U.S. interest-rate strategy in New York at Morgan Stanley, one of the 21 primary U.S. government securities dealers that trade with the Fed. ``People are still pretty jittery.'' Emerging Market Debt The U.S. swap spread is the gap between the swap rate and the yield on a 10-year Treasury note. The swap rate is what companies pay to convert interest payments to floating from fixed. Junk bond spreads widened 21 basis points on Feb. 27 to 279 basis points, the biggest jump since May 10, 2004, according to data compiled by Merrill Lynch & Co. That's 30 basis points higher than the 10-year low reached a week ago. The average spread for developing nations' bonds over similar-maturity U.S. Treasuries widened to 1.93 percentage points, the highest in three months, according to JPMorgan Chase & Co.'s EMBI Plus index. The spread is now 25 basis points above the record low of 1.64 percentage points on Feb. 22. Bond price fluctuations this week have pushed the volatility of U.S. Treasuries to the highest since December after it fell to a record low less than a month ago. Merrill Lynch's MOVE Index, based on prices of over- the-counter options on Treasuries maturing in two to 30 years, rose to 72.90 on March 1, the highest since Dec. 7. It fell to 54.9 on Feb. 5, the lowest since 1988, when the firm began tracking the data. Trading Volume Surges About $588 billion in Treasuries changed hands on Feb. 28, the most since at least June 2004, according to ICAP, the world's biggest broker of trades between banks. Volume has topped the three-month daily average of about $249 billion for the past four days. U.S. unemployment rolls reached a 14-month high in the past week, government statistics showed on March 1. The government this week said new-home sales tumbled in January by the most in 13 years and fourth-quarter economic growth was less than previously estimated. ``Some weak data could lead to some concerns about the economy,'' said Joseph Shatz, a government bond strategist in New York at Merrill, also a primary dealer. ``That's led people to believe the Fed may need to cut earlier than the market had thought.'' Interest-rate futures contracts show traders see about a 75 percent chance the Fed will lower its target overnight lending rate between banks to 5 percent from 5.25 percent at its June meeting. The odds were 14 percent a week ago. This week's rally pushed 10-year yields to 74 basis points below the Fed's target for overnight loans between banks, matching the most in 11 weeks.
I am always amused how quickly people jump on bandwagon (either long or short). Suddenly everybody gets bearish with almost no fundamentals changed from a week ago (when everybody was shouting "buy / no downside"). From the contrarian perspective these are strong signals....
Go long. I'm sure all that money flowing into treasuries has no correlation to confidence (lack thereof) in equities. Good luck.