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Euro Shorts Cover Modestly Following Max Pain; Dollar Bullish Bets Tumble
As expected, following the maximum pain rip in the EURUSD late last week, which took the pair from 1.38 to just under 1.4250, all the weak hand shorts took their losses and run. And indeed, as the CFTC has just reported, bearish bets tightened substantially from -76,512 in non-commercial net contracts, to -60,060. At this point it is safe to say that if the ridiculous move higher in the EURUSD did not force the covering of these hands, then they surely have the balance sheet to withstand such epic rips and then some. We no longer expect major short covering in the EURUSD to take the market higher, as the residual shorts not only have the conviction, but the marginable capital to see the EUR, and with it the stock market, much lower. And while of lesser significance, USD net long contracts declined by 25% from 32,110 to 23,823, simply meaning that when the scramble in a risk off moment returns, there will be quite a few incremental buyers of the USD, and thus shorters of that other currency: the EUR, now that both the JPY and the CHF are effectively pegged courtesy of their central banks decisions.
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Epic rips is right; blew my hair
in plain language? short EUR and JPY? go long US?
"there will be quite a few incremental buyers of the USD". I think that implies to go long the USD. I had to read it a couple of times.
The Euro rip last week raised gold in USD. Go USD! Let's see that price drop again.
lets hope so, i am long usd/jpy eur/usd eur/chf
short aud/usd
I thought the chf was pegged to the eur (do I have my acronyms mixed up?)
I increased my shorts on the 27th and 28th. Wouldn't be surprised if we see a sub 1,100 S&P within a few weeks.
I didn't cover my shorts either
Thankfully I covered about 90% of my shorts around Oct 4th. Trimmed some of my longs this week and bought back the shorts.
With regard to the S&P getting down to 1100 `in a couple of weeks` I do not disagree with you that it ought to be down there, But what on earth will it take to get it there. So much `bad` news just gets absorbed/shrugged off and levitation resumes.
Yesterday we had a brief but fairly spectacular disconect of the Euro/$ pair and the main equity indexes when the ECB cut rates. If the ECB print big time (and they are surely running out of other options) we may see this disconect get a bit more established.
I have come to regard Equities as mysterios instruments attached to a piece of elastic - as long as nothing really heavy is pulling them down they just - rise. No news=UP, thin volume=UP, Vague talking head statement=UP. Less bad than feared data=UP
And I put it down to an firm conviction from `the market` that we are going to bypass deflation and get right to serious inflation sooner rather than later. But Bonds do not confirm that do they? they still look to be expecting a long and drawn out battle with the spectre of deflation. And while Bonds yield so little they do make stocks `look` cheap to a lot of money managers. Equally I think a lot of investors are starting to think that they would rather have money in a well run business than loan it to a badly run government, who want to steel value through inflation. Of course a lot of business will not survive in a seriously inflationary environment, they just do not have the pricing power to stay ahead of rising costs. But nobody is looking quite that far - just yet.
It just does not pay to get too entrenched in an opinion of what is going to happen, the only thing that is reasonably certain is that volatility will not be tamed soon. And for those who like to trade this is good news.
A great weekend to all, its been another fascinating week to be alive, made all the more so by the good Tylers of ZH.
Good early morning read reload. thnx. ~SheHunter~
So the Italian bund spread closed above 450 points... at what time will they raise margin rates on the Italian debt and blow up most banks in Europe?
Italian finance minister warns Berlusconi if he doesn't resign there's going to be a bloodbath in the markets on Monday
At least one understand...
I filled my shorts...
Man up boys!
Max pain part one: Euro rallies on Greek restructuring deal going through. Credit contraction strengthens the currency it's denominated in. Max pain part two: Euro crashes on Spanish and Italian debt monetization by Draghi.
My FAZ stands ready and strong to take advantage of central-bank stupidity.
Weak short I am not.
Greek government confidence vote at 6PM EST, midnight Greece time.
The trading this week was " farcical" , at best. The primary axioms are still in place, if not more disconcerting!
Jobs and Real Estate; European/ China slowdown ; Lack of funding for EFSF , and liquidity as a whole ; Sovereign debt ; end of earnings season and lousy guidance;
This shit has no end to it! The Greeks are just a reason to buy micro, and not sell the macro issues. Worthless Specs./ Hedge fund traders just looking for scraps of carion!
Italy will be doing ok, most of the debt pile of that 120 percent GDP is owned by domestic banks and other institutions. Even banking sector is only 150 percent GDP, compared to 350-450 percent in UK or Ireland.
Actually, Italians had similar GDP debt percentages during 1990's with interest rates in 10Y in double figures and they still did not default. They also do not have heavily indebted consumers unlike in UK, US or even Germany.
The weakest link in Europe is UK now. France might be the weakest inside eurozone.
The whole concept of the euro is to provide Germany with an under-valued currency. If the PIGS leave, the euro will reflect the extremely competitive Northern Europe terms of trade and rally 20%. This is the only reason the Teutonics are providing any support for the PIGS.
All that's happening is predictable, as there are 7 stages that every major economy goes through. Those who know how it works profit & massive wealth is transferred to them. Several months ago I learned this information from a millionaire whose site I found & am sharing it with everyone I know.
His free video
"How To Create Incredible Wealth in Today's Economic Crisis"
is at:
http://theelevationgroup.net/presentation/register.php?a_aid=160667&a_bi...
Hope this info helps everyone as much as it has me.
Dr. Nancy