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  • #3,781
  • May 27, 2014 12:19pm May 27, 2014 12:19pm
Quoting Cecil Gee
you have $usd right on 200 dma on daily chart, will it break through or reject, i don't know but i took a little trade on eur/usd buy at $1.3616 and s/l at 1.3611
s/l at break even, I'm thinking that the $usd will break through as some of the liquid stocks are showing higher prices but with it being the final week traders will be closing and rolling positions ready for the new month
  • #3,782
  • May 27, 2014 12:38pm May 27, 2014 12:38pm
Quoting Cecil Gee
{quote} s/l at break even, I'm thinking that the $usd will break through as some of the liquid stocks are showing higher prices but with it being the final week traders will be closing and rolling positions ready for the new month
We can have it all: strong stocks, strong bonds, a strong USD. Strong gold? Sure why not? Everything goin up!

..yeah, right
"If The Fool persists in his Folly he will become wise." - William Blake
  • #3,783
  • Edited 3:48pm May 27, 2014 3:36pm | Edited 3:48pm
Quoting The Fool
{quote} We can have it all: strong stocks, strong bonds,....
Well I am as confused as I can be. TLT should be falling (and TBT up) anytime but it do not.....

http://video.cnbc.com/gallery/?video...o%7c&par=yahoo

There are lots of dopes like me who reason, "shouldn't long bond rates be GOING UP in anticipation of interest rates going up within the next year?" My TLT/TBT spread positions getting whacked, as they are set up with that bias, but at least I have given myself some time - I am in TBT Sep $70 calls, for instance...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #3,784
  • May 27, 2014 4:20pm May 27, 2014 4:20pm
Quoting The Fool
{quote} Well I am as confused as I can be. TLT should be falling (and TBT up) anytime but it do not..... http://video.cnbc.com/gallery/?video...o%7c&par=yahoo There are lots of dopes like me who reason, "shouldn't long bond rates be GOING UP in anticipation of interest rates going up within the next year?" My TLT/TBT spread positions getting whacked, as they are set up with that bias, but at least I have given myself some time - I am in TBT Sep $70 calls, for instance...
The short end would be expected to go up, because by "higher rates" (in the context of the Fed) is meant the short end of the curve. The Fed Funds rate I think is an overnight rate; as short as it gets. The further out on the curve you go the less rates are impacted by movements at the short end. That's why it's safest to be long the long end, and that's why I'm long the long end. That's my (sketchy) understanding of these things anyway.
Remember Greenspan's conundrum?
I have no clue what I'm talking about.
  • #3,785
  • May 27, 2014 4:22pm May 27, 2014 4:22pm
I should also say, when (if) stocks crater then I expect people to stampede into long bonds.
Maybe, though, stocks won't crater. Ever.
I have no clue what I'm talking about.
  • #3,786
  • Edited 6:03pm May 27, 2014 5:53pm | Edited 6:03pm
Quoting Boy Wonder
{quote} The short end would be expected to go up, because by "higher rates" (in the context of the Fed) is meant the short end of the curve. The Fed Funds rate I think is an overnight rate; as short as it gets. The further out on the curve you go the less rates are impacted by movements at the short end. That's why it's safest to be long the long end, and that's why I'm long the long end. That's my (sketchy) understanding of these things anyway. Remember Greenspan's conundrum?
I must say I think you have it backwards there, old chap: the longer the duration of a bond the more sensitive it is to rising rates. Rate changes have less impact on short-duration bonds because there is less time for the rate change to take effect and impact bond price.

If I expect the Fed to be actively raising rates in 2016, I might still buy 2-yr bonds now, because the future rate increase will not have had enough time to impact the bond's value. Not so the 30-yr bonds: why would I buy a 30-yr bond today at 3.37% when I "know" that the rate will be >4% in just a couple years? So, anyway, that's why I'm expecting the long bonds to fall now, or soon. Maybe we will see what's what, or at least get a clue, on the next 30-yr auction on June 12.

The sticky spot, of course, is "know" - and the Fed has its minions out and about saying they may not even have to use the Funds rate, but rather will be tweaking the overnight reverse repo rate; you have Ben Bernanke at his $250,000-a-plate dinners saying he will die before the funds rate goes to 4%; you have Belgium out buying up long Treasurys that Russia dumped ($150bio worth, so they say); and then you have more and more financial press warning about impending inflation, etc, etc - it's hard to "know" wtf is going on.

I don't mind being confused, though (hey, I'm used to it by now) and I especially don't mind volatility in the bonds trade, I'm just grrumbling because I'm a bit on the wrong side of things, but that will change.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #3,787
  • May 27, 2014 9:13pm May 27, 2014 9:13pm
VIX will have to be rejiggered.
Attached Image (click to enlarge)
Click to Enlarge Name: 2014-05-27_uvxy.png Size: 34 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #3,788
  • May 28, 2014 7:28am May 28, 2014 7:28am
Quoting The Fool
{quote} I must say I think you have it backwards there, old chap: the longer the duration of a bond the more sensitive it is to rising rates. Rate changes have less impact on short-duration bonds because there is less time for the rate change to take effect and impact bond price. If I expect the Fed to be actively raising rates in 2016, I might still buy 2-yr bonds now, because the future rate increase will not have had enough time to impact the bond's value. Not so the 30-yr bonds: why would I buy a 30-yr bond today at 3.37% when I "know" that...

Sorry mate, I think you must misunderstand me. I don't have it backwards at all. You may be speaking of something different; certainly what I say is correct and can be demonstrated to be correct.
There is a difference between "distant" rates (of any tenor) and long rates (which typically refers to 30 years and maybe 10 years). I'm speaking of long bonds *now*. The long end (e.g. 30 years) *now* is less affected by expectations for (and indeed actually) rising rates than the short end *now*. Hence there is a curve. Of course there is a curve. And its shape changes (flattens, steepens) as the market prices the different tenors differently. My feeling is that 30 years are a poor short now if you think the Fed is going to raise rates anytime soon.
This can be seen e.g. by comparing the 2 years yield and the 30 years yield - see weekly charts at http://www.investing.com/rates-bonds...advanced-chart and http://www.investing.com/rates-bonds...advanced-chart, which clearly show the 2 year rate gently trending upwards over the last year but the 30 year rate definitely trending downwards since the beginning of this year (when the Fed started tapering).
I'm not interested in what 30 years futures are are doing 2 years out. I'm interested in what they are doing *now*.
Furthermore "Greenspan's conundrum" was a reference to how the long end of the curve didn't budge despite 400bps of rises in the FF rate (the very short end):

"what is unusual about the 2004-05 episode is that bond yields remained relatively unchanged, despite the Fed’s campaign to raise interest rates.
Furthermore, while Greenspan first noticed the 10-year Treasury yield failed to increase when the FOMC began increasing its funds rate target in June 2004, the relationship between changes in the funds rate and changes in the 10-year Treasury yield could have occurred earlier. A natural way to investigate when the change occurred is to test of a break in the relationship by estimating the equation Indeed, over the entire period from June 2004 through July 2006, the 10-year Treasury yield increased by about 30 basis points despite a 400-basis-point increase in the funds rate target"

https://research.stlouisfed.org/wp/2012/2012-036.pdf

That bolded text is in summary my point.
I see 30 years are up again today.


"Not so the 30-yr bonds: why would I buy a 30-yr bond today at 3.37% when I "know" that the rate will be >4% in just a couple years? So, anyway, that's why I'm expecting the long bonds to fall now, or soon."

Which rate is "going to be 4%" in just a couple of years? The 30 year yield? That's not really a "rate" except insofar as mortgage rates are priced off of the long end. But those mortgage rates are derivatives of the long end. The "rates" that most people mean when they speak of rates (I think) is the Fed Funds rate, and that's AFAIK an overnight rate, and furthermore we have no idea if that rate will be 4% (highly unlikely). If you do mean the long end (presumably you do as the chances of the FFR being 4% in just 2 years must be pretty slim) I don't think anybody knows that the 30 year will be yielding 4% in 2 years' time. It may, it may not. I think it's a coin flip; but I wouldn't expect more than 4% in the near future.
I have no clue what I'm talking about.
  • #3,789
  • May 28, 2014 7:38am May 28, 2014 7:38am
I was reading around last night and it seems to me that the bulls (and there appear to be many of them all of a sudden) are feeling jubilant, and vindicated, and very confident that higher highs are coming, and quickly.
It was quite depressing as it seemed to suggest that I was very silly and very wrong here to be expecting some weakness (not a crash at this juncture, not even 5%, just a small pullback) in the indexes.
But then, the sheer volume of these people crawling out of the woodwork to say "I told you so, stupid bears" (in not so many words) is both depressing and, in that funny way that things work backwards in trading, encouraging.
It seems that all "they" have to do is nudge the markets up by about 1% in a couple of low volume sessions and it's enough to get the bulls out in full force screaming for 1950, 1980, and even (I kid you not) 2500 within 12 months.

Anyway, I'm short enough as it is, so if I'm wrong, I'm wrong, and I'm just going to have to rebalance (maybe sell puts, maybe close positions at a loss) at some point. I'm not adding to shorts here though; there is too much of a risk that the bulls are right.
I have no clue what I'm talking about.
  • #3,790
  • May 28, 2014 7:43am May 28, 2014 7:43am
Quoting The Fool
VIX will have to be rejiggered. {image}
Go by the cash VIX and not these future ETN and ETF's as they always get split
  • #3,791
  • May 28, 2014 7:55am May 28, 2014 7:55am
Quoting Boy Wonder
{quote} Sorry mate, I think you must misunderstand me.
Sorry if I did, BW - obviously we're talking about different things,
"If The Fool persists in his Folly he will become wise." - William Blake
  • #3,792
  • May 28, 2014 7:57am May 28, 2014 7:57am
How low can it go?
Attached Image (click to enlarge)
Click to Enlarge Name: 2014-05-28_gld.png Size: 153 KB
"If The Fool persists in his Folly he will become wise." - William Blake
  • #3,793
  • May 28, 2014 8:03am May 28, 2014 8:03am
Quoting The Fool
How low can it go? {image}
I am long and wrong. Boo hiss.
I have no clue what I'm talking about.
  • #3,794
  • May 28, 2014 8:04am May 28, 2014 8:04am
Quoting The Fool
{quote} Sorry if I did, BW - obviously we're talking about different things,
No worries mate.
I have no clue what I'm talking about.
  • #3,795
  • May 28, 2014 8:13am May 28, 2014 8:13am
Quoting Boy Wonder
{quote} I am long and wrong. Boo hiss.
USD strength in effect.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #3,796
  • Edited 8:40am May 28, 2014 8:21am | Edited 8:40am
PBS Frontline aired shows on Ukraine last night, doesn't look too good.

http://www.pbs.org/wgbh/pages/frontl...e-for-ukraine/
"If The Fool persists in his Folly he will become wise." - William Blake
  • #3,797
  • May 28, 2014 8:27am May 28, 2014 8:27am
Quoting The Fool
How low can it go? {image}
I may be wrong with an earlier quote in saying Gold break down may be false and then a rise, if it does not bounce soon then we be testing the lows and go down even lower, perhaps below $1100 but to be honest I don't know that's why I play the strangle when unsure, what I do know we are in for a $100-$200 move also quoted two weeks ago
  • #3,798
  • May 28, 2014 8:54am May 28, 2014 8:54am
Quoting Cecil Gee
{quote} I may be wrong with an earlier quote in saying Gold break down may be false and then a rise,
well, I wouldn't rule that out, but the long case for gold doesn't look too strong. We knew that tight range was gonna spit out a big move one way or another, just have to see if it can put a trend on....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #3,799
  • May 28, 2014 9:00am May 28, 2014 9:00am
sold my UNG Jul $20p today for a $0.02 loss, will watch build numbers tomorrow. I don't have conviction now re: natgas moves for the summer....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #3,800
  • May 28, 2014 9:05am May 28, 2014 9:05am
Quoting Boy Wonder
I was reading around last night and it seems to me that the bulls (and there appear to be many of them all of a sudden) are feeling jubilant, and vindicated, and very confident that higher highs are coming, and quickly. It was quite depressing as it seemed to suggest that I was very silly and very wrong here to be expecting some weakness (not a crash at this juncture, not even 5%, just a small pullback) in the indexes. But then, the sheer volume of these people crawling out of the woodwork to say "I told you so, stupid bears" (in not so many words)...
Hey BW - Yeah, it certainly seems that way.....whenever there has been a little pullback the bulls eventually recover control and take the market higher. It seems the "the SPX has hit 1900 euphoria" is now recruiting more bulls to push even higher. Next week I see two potential catalyst to move this market one way or another: 1) Mr Draghi's actions at the ECB meeting - there are thoughts he'll introduce some form of QE program and 2) NFP's without having any excuse of the polar vortex skewing data! There could be some big gains on the back of these events and if the market reacts negatively in the short term, it'll probably be a few days before the bulls jump in again.........I could of course be completely wrong :-) A SPX at 2500 seems quite ambitious (but not impossible!!!!)
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