Monday, January 31, 2011

Ah - Risk Assets

Frustration level is climbing even though going into today we knew how it could possibly play out.  Volume was LOW today, oil caught a nice bid and the VIX retraced a small portion of its 24% move up.  Still, watching days like today for the past few months has become rather annoying.

Bulls that are long anything are rewarded each day and grow smarter and smarter each day.  Little hint of sarcasm there with the smarter comment.  Anyone who has blown up an account, which is pretty much any successful trader understands the worst thing that can happen is finding success in the market when you really don't know what you are doing.  The smarter you think you are the more you are being ready for an expensive lesson on trading capital markets.

I noticed a comment the past few days from a "retail" site I pop in on at times of how their prior level of leverage was not enough.  They are literally finding any money they can and moving it into equities and leveraging up.  You can't get anymore bullish than that from a retail standpoint.

Silver managed to catch a bid today while gold did not but did recoup some of its losses. Tomorrow is the million person march in Cairo so that could be interesting.  Banks are shut down and food is tight (and people are tired after seven days of protests) so things could get really volatile fast.  There's talk of protests on Saturday in Syria and reports of fighting with youths and police in Sudan.

Anyone who thinks this is going away soon because equities caught a bid (more like half a bid) could surely be mistaken.  Tomorrow is the first of the month and a recent study showed the best trade was to simply go long equities the first day of the month.  Literally just hold the first day of the month.  So, we may see a little more bids come into the market.  But following the April 2010 high, which I am sure many traders are watching the correlations, be careful about Wednesday.  Don't forget the NFP report is on Friday. Heaven help anyone who believes any "strong" report out of ADP this month.



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