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Kudos to MMs

Discussion in 'Chit Chat' started by nitro, Oct 23, 2008.

nitro
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"FV" ~887

News: Jobless claims, Treasury International Capital, RBC Cash index, Philly FED, Nat gas inventories, Housing index.

IRs: Several announcements.

Oil futures down decent pre-market. It is like saying, I was taken for a ride yesterday, but I am getting off that bus now.

Gold futures more in lock step with equities and of course the dollar.

There was very little resistance on all the technical levels that we broke through yesteday. The gap fill proved to be little resistance, 930 the same. We are range trading with a pretty massive range, 872 to 950.

The VIX actually went higher on a strong up market, something that I theorized earlier in this thread should happen more often. In a trading range market it makes even more sense towards the top of the range. Continue to pay attention to seasonals, i.e., opts ex.

#631 Jul 16, 2009

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nitro
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"FV" ~885

News: Housing starts

IRs: nothing

Oil futures in the trading range we though they would be in. It will be interesting to see what happens after options expiration.

Gold futures resisted strongly going higher yesterday even though the dollar was getting weaker. That is clearly divergence and imo, the next decent move up on the dollar gold gets wacked.

Options expiration. As you all probably know, gamma is very steep and trading is dominated by MMs delta heding, causing fits and spurts in stocks, so the mispricings become evident. I have wanted to do a study of closing prices on expiration...

Notice we are getting close enough to downside edge with "FV" getting far enough from SPX. Only trade with momentum.

Only real resistance is 950 that is close.

#632 Jul 17, 2009

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nitro
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"FV" ~900.

News: Leading indicators, Dennis Lockheart speaks.

IRs: 3-Month and 6-Month auctions, some announcements.

Oil futures have surprised me a little bit. Well above the +/- $3 range from $60 to make me wrong. Seriously, that may be the best trading market right now.

Gold moving higher on dollar weakness. That is a disaster waiting to happen.

SIFs are going higher pre-market, which should bring SPX close to 950 resistance. I would not sell 950 resistance on an uptick, only on a downtick (red bar), but that should be second nature by now. 970 - 972 is major resistance, although nothing says we are trading outside of this trading range yet to be talking about 970-972. We may get decent short edge above "FV" as we are getting close to +50.

#633 Jul 20, 2009

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nitro
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Nothing has changed, but I thought it was worth noting that Mr.Market is now +50 above "FV". Or is it Mr Magoo?
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#634 Jul 20, 2009

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nitro
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"FV" ~ 897

News: Goldman store sales, Redbook, Bernanke speaks.

IRs: 4-week bill auction

Oil futures dancing with SIFs again.

Gold futures stalling. One wonders what could get it going other than massive inflation or some terror event.

Earnings have been better, in some cases much better than expected. Jobless recovery very likely as stated several times in this thread. There is a great disconnect between American corporations well being and a huge portion of it's citizens. And getting worse.

I think part of the inflows is that people are being convinced to restructure their portfolio a bit, even older people. The usual rule as to stock/bond allocation ratio is to subtract your age from 100, and that is the percent of your portfolio that should be in stocks vs bonds. With people living longer, and having to work longer, and many of them being convinced that the market is "cheap" (relative to yields anyway), imo this is partly what is doing some of the driving of SIFs higher. In my experience, this is what happens to the investor:

http://barbuscabucharestblog.blogspot.com/2008/10/american-way-to-beat-rug.html

We closed a fraction above 950 SPX yesterday, with SPX getting far enough above "FV" to give short edge. As of this writting, it looks like 950 resistance is going to be left behind, and 972 (966 ?) is next. I would sell 966 on a red bar, 972 on a red bar, assuming we stay at least +50 above "FV" at that time. There is a juicy gap fill of 905 to 915 that should be the target of shorts.

#635 Jul 21, 2009

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nitro
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Bernanke: Fed Won't Let Infl Rise; For Now,Supporting Growth Jul 21
/ 14:22

By Steven K. Beckner

WASHINGTON (MNI) - Federal Reserve Chairman Ben Bernanke Tuesday
continued to provide assurances that the Fed will not permit an
inflation outbreak while also vowing to promote economic recovery in
congressional testimony.

Bernanke, responding to questions from members of the House
Financial Services Committee after presenting the Fed's semi-annual
Monetary Policy Report to Congress, expressed concern about the state of
the commercial real estate market and said the Fed is doing its utmost
to ease credit conditions in that market.

He also expressed concern a number of times about the size of
federal budget deficits and their possible implications for long-term
interest rates. He said it is "premature" to talk about a second fiscal
stimulus package.

And he defended the Fed's independence against proposals to subject
monetary policy to audits by the General Accounting Office.

In his prepared testimony, Bernanke had said the Fed has the tools
-- and, he implied, the will -- to tighten monetary policy in a "smooth
and timely way" when needed to avoid a future rise in inflation. But he
made clear the Fed will not be tightening in the foreseeable future.

He said inflation is "subdued" and apt to remain so for two years.
And while citing signs of improvement in economic and financial
conditions, he warned the apparent stabilization of consumer spending
could prove "transient." So he said "monetary policy remains focused on
fostering economic recovery."

Bernanke continued in that vein as a number of members questioned
him about inflation risks growing out of the Fed's dramatic expansion of
its balance sheet and the supply of bank reserves.

Despite this expansion, he said, "the Fed is not putting money out
into the economy." He said the Fed has been creating bank reserves, but
said they are "just sitting idly, they are not chasing goods." And he
said "we have ways of sucking it back in" if necessary.

Bernanke said he and the Federal Open Market Committee are "quite
aware of this issue" and declared, "We will not allow broad measures of
money to increase rapidly enough to cause inflation."

Earlier, Bernanke defined inflation as "a change in the consumer
price level," and he said that "is very stable." He said monetary
aggregates like M2 are "not growing rapidly."

Bernanke called inflation fears "misguided" in the sense that the
Fed can withdraw monetary stimulus in time to avoid inflation. And he
went on to say that he does "not think financial markets are showing a
great deal of concern about inflation."

Given "subdued" inflation and the weakening of the labor market,
Bernanke said "the Fed is being very aggressive" in "trying to support
the economy." And he implied that this stance will continue for the
foreseeable future.

He said "the outlook has certainly improved since March," but made
clear he still sees downside risks to growth and only a modest recovery
that will keep unemployment abnormally high.

"We have a very long haul," he said, adding that unemploymnent is
apt to stay high "for quite awhile."

Asked about when the Fed might begin to tighten credit, Bernanke
said it is "a very difficult problem" to try to "pick the right time to
tighten ... .It's an uncertain business ... to try to judge the right
time."

In making that judgment, he said the FOMC will "look for more
evidence of sustained recovery" and increased utilization of labor and
other resources, as well as wage-price pressures.

Bernanke conceded that if inflation expectations were to rise while
the economy remained weak and unemployment high, that would "pose a
serious problem for the Fed." Were the Fed to "lose credibility" as
reflected in increased inflation expectations, he suggested the Fed
would have little choice but to respond even if the economy had not
fully recovered.

But that is not a scenario the Fed considers likely.

Echoing earlier prepared testimony, Bernanke said the Fed's ability
to pay interest on reserves is "a very powerful tool" that "will help us
control the federal funds rate" when it comes time to unwind the Fed's
"highly accommodative" monetary policy.

Bernanke denied that the Fed is or has any intention of "monetizing
the debt" which the U.S. Treasury is issuing in record amounts to fund
mounting federal budget deficits. He said the purpose of the Fed's
various credit programs has been "to address private credit markets" and
said that "when we complete the $300 billion (in planned purchases of
longer term Treasury securities) we will have less Treasuries" than it
had before the program began because it has reduced other Treasury
holdings.

"We are not taking a significant portion of Treasuries," he added.

Asked whether the Fed will buy more Treasuries after it has bought
the $300 billion authorized, Bernanke said "that's a decision the FOMC
needs to make because it has implications for monetary policy."

"We don't have any near-term plans to divest ourselves" of Treasury
securities," he said in response to a question.

In one of his numerous responses to questions about problems in
commercial real estate, Bernanke said "We're paying a lot of attention"
to that sector and "watching that situation very carefully." He said the
sector is "weakening" and cited rising vacancy rates and falling rents
and property values.

He noted that the Fed has expanded its Term Asset-Backed Securities
Loan Facility (TALF) to finance purchases of both new and "legacy"
commercial mortgage-backed securities (CMBS). He expressed hope that
this will help increase credit flows in that market, but he said it is
"too early" to judge its success.

Bernanke also said the Fed is considering whether to add other
"complex" assets to the TALF program. And he vowed to give the financial
markets plenty of notice before that and other programs are phased out.

"We will extend (TALF) if conditions warrant," he said, but "we're
not necessarily going to try to hit any particular number" of lending.

As he had in prepared testimony, Bernanke stressed the need for
"fiscal sustainability." If financial markets do not perceive that there
is a plan to return to lower deficits, he said long-term interest rates
could rise. He expressed concern that the U.S. debt to GDP ratio is on
track to rise from 40% to 60% next year and possibly go higher than
that.

There needs to be "a plan for getting back to a more sustainable
level," he said.

Bernanke said the Treasury's "ability to float large amounts ( of
debt) in the short and medium term depends on the credibility of debt
reduction." If markets do not think there is a credible plan, he said
out-year deficits will be "brought forward" and affect yields.

If fiscal policy stays on an unsustainable path, he said he agreed
with Congressional Budget Office director Douglas Elmendorf's warning of
"substantial harm" to the economy.

Bernanke said the Obama's January forecast of the impact of its
stimulus program was "clearly ... too optimistic." But he said it is
"very early" to talk about another fiscal stimulus package, noting that
"less than a quarter" of the Obama administration's first $787 billion
stimulus package has been implemented.

Twice, Committee Chairman Rep. Barney Frank, D-Mass., warned
Bernanke against "premature" tightening. Meanwhile, Rep. Ron Paul,
R-Tex., has spearheaded an effort to force the Fed to be more
"transparent" about monetary policy.

Bernanke inveighed against "political interference" which he said
could frighten financial markets into expecting more inflation, which he
said could lead to higher long-term interest rates that would hurt
economic growth. Forcing the FOMC to release transcripts of its meetings
earlier than the current five years would be perceived as political
interference and an undermining of the Fed's independence, he warned.

** Market News International Washington Bureau: 202-371-2121 **
More...

#636 Jul 21, 2009

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nitro
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"FV" ~890

News: MBA purchase applications, Oil inventories, Bernanke speaks

IRs: nothing

Oil futures being a good soldier and following SIFs orders

Gold futures, blah.

Markets got it right the first half of yesterday, but then the specter of AAPL earnings got people thinking they should buy, and NQ went green, which took ES by the hair and dragged it higher. Market is priced to the hilt here imo. We are getting 50+ short edge from "FV". Short target as stated yesterday. If short, watch NQ - people have a love affair with tech all of a sudden.

#637 Jul 22, 2009

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nitro
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"FV" ~ 898

#638 Jul 23, 2009

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ASusilovic
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If am counting right, we are now 70 points above FV ?

What do we do now, nitro ? Still waiting for this gap to fill at 912 ?

#639 Jul 23, 2009

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nitro
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Quote from ASusilovic:

If am counting right, we are now 70 points above FV ?

What do we do now, nitro ? Still waiting for this gap to fill at 912 ?
More...

"FV" ~ 905. So about +65.

I would sell 972 SPX on a red bar. Don't trade against momentum.

#640 Jul 23, 2009

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