Essential Chart Update
With Manic Markets, it is crucial to evalue both long and short term charts and levles often. We wrote of the Squeeze set up three days ago. Once again, the markets bounced off the support levels, and fooled too many of the new “smart” shorts. Our long term scenario is intact, and we still believe the big dynamics on the downside will evolve later this autumn. There is a big risk of a Collapse happening, just when everybody is sucked into the long trade, and shorts have given up. For now, let’s review the short term charts, all hitting resistance levels. Let’s just wait for Biggs to turn bullish, again.
SPX
Black Swan Manager Returning 23%
While majority of Investors lost huge sums in August, and some lost it all, there are the “free thinkers” out there producing extraordinary returns for their clients. Bloomberg reports on Taleb and his crew:
Mark Spitznagel pushes the throttles on his new twin-engine Chris-Craft Corsair 28, slicing through Grand Traverse Bay in northernMichigan on a warm day in late July. As the speedboat reaches more than 50 miles per hour, Spitznagel’s blond hair flying in the wind, he churns up a big wake.
Turbulence is where Spitznagel, the founder of hedge fund Universa Investments LP, thrives. On Aug. 4, while Spitznagel is still at his lake house, the Standard & Poor’s 500 Index begins to plunge as weak economic data prompt predictions of a double- dip recession. By noon, Spitznagel, a so-called black swan investor, has spoken with his Santa Monica, California-based firm 15 times by phone to capitalize on its positions to make money while other investors lose it, Bloomberg Markets magazine reports in its November issue.
At Universa’s office, between conversations with Spitznagel, two traders frantically buy and sell derivatives, including options on theS&P 500. The index’s 4.8 percent dive on that day is producing a windfall for Universa, says Brandon Yarckin, a Universa associate who handles investor relations. He points to a Japanese print on the wall — one of Spitznagel’s favorites — depicting a giant wave about to crash onto a group of hapless fishermen.
“Days like today are what we are here for,” he says.
Full article here.
Future of HFT
As HFT churn this no liquidity market, we present you thoughts on the Future of Computer Trading in Financial Markets.
Computer based trading has transformed how our financial markets operate. The volume of financial products traded through computer automated trading taking place at high speed and with little human involvement has increased dramatically in the past few years. For example, today, over one third of United Kingdom equity trading volume is generated through high frequency automated computer trading while in the US this figure is closer to three- quarters.
Whilst the prevalence of computer based trading is not disputed, there are diverse views on the risks and benefits which it brings today, and how these could develop in the future. Gaining a better understanding of these issues is critical as they affect the health of the financial services sector and the wider economies this serves. The increasingly rapid changes in financial markets mean that foresight is vital if a resilient regulatory framework is to be put in place. A key aim of this Foresight project, which has been overseen by a group of leading experts, has therefore been to draw upon the very best science and evidence from across the world to take an independent look at these issues.
Full reading here.
Greed and Fear-What is volatility telling us?
Investors are acting increasingly manodepressive. With normal moves now approaching 3-4% both up and down, people are “sucked” into positions they probably don’t want to hold. With diminishing liquidity and increased HFT Trading, market could be facing real stress in soon future. Our “base case” scenario, will require some more to the upside, as the last investors are not long enough, yet.
Below some points on volatility, by Macro Story.
Looking purely at the Vix one could say it is moving down as fear comes out of the market. Equities are moving higher, Vix moving lower, all is coming back to normal. But if you look behind the Vix it is signaling a completely different picture.
Trichet’s Full Speech
Ladies and gentlemen, the Vice-President and I are very pleased to welcome you to our press conference here in Berlin. Let me take the opportunity to warmly thank President Weidmann for his invitation and kind hospitality. I would also like to express our special gratitude to the staff of the Deutsche Bundesbank for the excellent organisation of our meeting. Let me now report on the outcome of today’s meeting of the Governing Council, which was also attended by the President of the Eurogroup, Prime Minister Juncker, and Commissioner Rehn.
Food Prices Fall…
A little cheaper food lately, at least one good thing with the collapse in commodities prices. FAO publishing the latest food prices.
The FAO Food Price Index (FFPI) averaged 225 points in September 2011, down 2 percent, or 4.5 points, from August. The FFPI is only 13 points below the peak of 238 reached in February 2011, though still higher than its September 2010 value of 195 points. The recent decline reflected decreases in international prices of most commodities included in the Index, with prices of sugar , grains and oils falling most.
A Wise and Painful Prediction
From Ekathimerini. “Do you really think we’re going to make it?” I asked a wise-headed Greek who lives outside the country a couple of years ago. He’s the kind of person who feels deeply connected to the nation but, unfortunately, as the cliche goes, Greece hurts him.
His prediction was as follows:
First, he said, the country will come under the supervision of the International Monetary Fund because there will be a liquidity problem and everyone will try to hide the fact that the country is effectively bankrupt. After a year or so, he went on, there will be talk of restructuring the debt.
A few months later, the taboo will break and everyone will talk about a “reasonable haircut.” This will also occur, but since the country will have hit an impasse by then, and none of the conditions will have been met, there will be talk of a bigger haircut and some form of default on its debts.
This too will happen, he said, and then there will be one more stage — if, as expected, things go awry — where the country will be forced to abandon the eurozone because it will not be able to stand anymore pressure.
Full article here.
Thinking outside the Box
“Do you want to spend the rest of your life selling sugared water, or do you want a chance to change the world?”
Steve Jobs
Courtesy Jessie
News That Matters
Ft.com
Apple co-founder and former chief executive Steve Jobs, regarded as one of the most important American leaders of his generation, died on Wednesday at the age of 56, the FT reports, after a long struggle with pancreatic cancer. His death was announced late on Wednesday by Apple’s board, http://ftalphaville.ft.com/thecut/2011/10/06/694506/apple-co-founder-steve-jobs-dies/
Citic Securities, China’s biggest brokerage by market value, declined in its Hong Kong trading debut, Bloomberg reports. Shares in the company fell fell as much as 11 per cent to HK$11.90 and traded at HK$12.2 at 11:01am. http://ftalphaville.ft.com/thecut/2011/10/06/694646/citic-securities-shares-falls-in-hong-kong-debut/
Thousands of people, including representatives of several trade unions, marched through the streets of lower Manhattan on Wednesday in an escalation of the “Occupy Wall Street” demonstrations that began last month, http://ftalphaville.ft.com/thecut/2011/10/06/694596/wall-street-protest-numbers-grow/
Bearish hedge fund managers have reaped some of their biggest gains since the collapse of Lehman Brothers amid the market turmoil triggered by the eurozone debt crisis, the FT reports. Funds reaping big gains include Brevan Howard’s $24bn flagship fund, http://ftalphaville.ft.com/thecut/2011/10/06/694576/hedge-fund-bears-win-on-eurozone-crisis/
Steve Jobs Passed Away
According to Apple, Steve Jobs has passed away. May he rest in peace.
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