Tomorrows big data point is the spanish bond auction. My thoughts are
that the auction will go off without a hitch thanks, largely, to the
sponsorship of the ecb. What this means, in the short run, is that the
euro probably rallies and u.s. equities rally in response. I expect
the s and p to retest those old highs of 1420ish but i will only get
long if it takes out yesterdays highs. The euro rally has been
interesting and fairly costly to me over the recent days and i have
decided to lay off aggressive shorts until the futures settle below
130.00. Of course, I've had that same opinion for about a week but
that doesnt stop me from trying to front run the action each day and
ending up with a depleted college fund and a margin call. Tomorrow i
will try something new, discipline.
The euro's rally deserves a good deal of pondering. The ecb has
decided to go to great lengths to accommodate and liquidate in order
to save the euro. Normally, this type of policy would soften a
currency from a dilution standpoint, but i guess when the alternative
is a crash and burn scenario, dilution is the preferred outcome.
Remember, that at some point printing tons of euro's will be euro
negative and it will pay to be short, but not today. There is also a
theory that part of the euro's recent bid is do to a repatriation
trade by european banks. In other words bank stress(particularly
french banks) have caused them sell their dollar based assets to bring
back money in the form of euro's in order to shore up reserves. Im not
sure i buy this theory but it deserves more research.
The way to play the euro trade is to sell a ratio back spread
wherein you sell the 130.00 puts to buy a greater number of the 129
and 128 puts...The advantage of this is that its cheap, but in order
to profit you will need a major down move in the euro. Thats fine by
me because at some point i believe it will come.
If you follow me on twitter you know that i established longs in
intuit(intu) and seagate(stx) early yesterday and they turned out to
be decent trades. I still like both those trades and may look to
add....oh i like the chart on southern company again and i may re-up a
long position in that.
that the auction will go off without a hitch thanks, largely, to the
sponsorship of the ecb. What this means, in the short run, is that the
euro probably rallies and u.s. equities rally in response. I expect
the s and p to retest those old highs of 1420ish but i will only get
long if it takes out yesterdays highs. The euro rally has been
interesting and fairly costly to me over the recent days and i have
decided to lay off aggressive shorts until the futures settle below
130.00. Of course, I've had that same opinion for about a week but
that doesnt stop me from trying to front run the action each day and
ending up with a depleted college fund and a margin call. Tomorrow i
will try something new, discipline.
The euro's rally deserves a good deal of pondering. The ecb has
decided to go to great lengths to accommodate and liquidate in order
to save the euro. Normally, this type of policy would soften a
currency from a dilution standpoint, but i guess when the alternative
is a crash and burn scenario, dilution is the preferred outcome.
Remember, that at some point printing tons of euro's will be euro
negative and it will pay to be short, but not today. There is also a
theory that part of the euro's recent bid is do to a repatriation
trade by european banks. In other words bank stress(particularly
french banks) have caused them sell their dollar based assets to bring
back money in the form of euro's in order to shore up reserves. Im not
sure i buy this theory but it deserves more research.
The way to play the euro trade is to sell a ratio back spread
wherein you sell the 130.00 puts to buy a greater number of the 129
and 128 puts...The advantage of this is that its cheap, but in order
to profit you will need a major down move in the euro. Thats fine by
me because at some point i believe it will come.
If you follow me on twitter you know that i established longs in
intuit(intu) and seagate(stx) early yesterday and they turned out to
be decent trades. I still like both those trades and may look to
add....oh i like the chart on southern company again and i may re-up a
long position in that.
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