FT has been trading full time from home for two years, with nothing but four kids and a beach to distract him .
He fills his spare time with weight training and rugby, though more coaching than playing these days.
FT mostly trades the forex markets and although he plays FTSE on occasions his bread and butter market is £$.
He likes to think that his technique is evolving but still hasn’t the temperament or money to back the big calls. He prefers to trade between 1 and 3 times a day, aiming to take regular small gains, but feels part of the evolution is in not dealing if the conditions don’t feel right.
I Escaped The Hammer Blow-Just!
Hey! It may just be another form of witchcraft, but yesterday’s call on a bounce in the markets was pretty spot on (Will A Hammer Save The Market?). I just wish I’d taken notice of it myself and closed my short bets down. Instead, I used my ‘Get Out Of Jail’ card this morning, and I can tell you I’m not going to risk crossing any roads or walking under ladders in case my luck’s run out.
Poor earnings after the close took the edge off the Dow, but Citigroup’s ‘only a bit crap’ results have given the rose-tinted view a boost. Oil and gold are off the lows and the main currencies are doing diddly squat.
Question. Are markets like we’ve experienced this week character forming, or just a better weight loss tool than the Atkins Diet? How are other traders feeling? I’m drained. This week has seen my various (including options) positions swing from a £4000 loss on the market fall, to a £1200 loss on yesterday’s rise to a net profit of £700 for the expiry month. Well down on usual, but given the circumstances I’ll grab it with both shaking hands.
I’ve never particularly liked Merrills, but I’m grateful that they and the geek boys at Google and Microsoft gave the market a push down this morning. I used the fall to close some of my short FTSE position. I closed some more bang on option expiry and went completely flat when the Citigroup earnings were released. I decided against running the short against my August options as I reckon I’ll have a better opportunity to either buy back the options or open another short. And frankly, I want a break. I want a day or two of looking at the market objectively, without a P&L account clouding my judgement.
Sure, I might be tempted in to trade, but they’ll be with a tight stop to take me out, win or lose.
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Hey, what about yesterday’s drop in the oil price then? Check out the chart below:
I don’t tend to trade oil, but I might be tempted if it drops back below $130. I still find it hard to bet against oil long term with so many factors that can potentially cause a spike up. The question is whether to buy with a tight stop in case we get more of yesterday’s moves, or just place a smaller buy bet and stick it in my bottom drawer with the ‘Patience’ sticky label on it.
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There’ve been a few posts about failing systems on the comments board recently; I can add two here from this morning. Options Expiry on FTSE happened at around 10.15 this morning. At the same time my squawk news system packed up and my special options platform went out in sympathy. Luckily it proved the value of my disaster recovery planning; I have separate computers, each with my dealing platforms, on separate internet providers. So it was only a minor inconvenience rather than a wholesale catastrophy.
I’m off to grab a shot of caffeine and watch the markets in a more relaxed demeanor. I hope those going to the Oil Seminar tomorrow find it entertaining and useful.
Enjoy the Weekend
July 18th, 2008 at 12:58 pm
Totally with you on the weight loss…i look like i have did a spell in a POW camp.
July 18th, 2008 at 1:26 pm
oil looks like its going south again if anyone is interested…im in at 131.55
July 18th, 2008 at 4:35 pm
93% of PP money short on FSTE … oh dear.
July 18th, 2008 at 4:58 pm
Hmm,
depends how many of them are long-term. Today’s levels are better than most this week for opening a short. Me, I’m leaving it alone to see what the mood’s like on Monday. But check out the daily chart, the price is damned close to the downtrend line and 14-day MAV.
Have a good craic at the weekend.
July 18th, 2008 at 5:03 pm
Same to yourself FT … looks like “long is the new short” ! (i cant complain)
Have a goodun!
July 19th, 2008 at 12:49 am
Hi FT,
You just knew that the FED & the SEC would have their dirty mitts all over this one. They just can’t let the land of the free have a free market that goes down as well as up can they. Must be something to do with Bernanke making sure his banker mates don’t suffer too much in the bloodbath.
The extract below is from Todd Harrison over at Minyanville. Goes a long way to highlighting why the jump in the US markets was so extreme and why it didn’t have much to do with bank results or oil prices. I thought Bernanke was meant to be a great student of the 1929 depression. So why does he insist on interfering and manipulating the ‘free’ markets and pushing the inevitable further down the curve.
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The following is offered by someone I have tremendous respect for, someone who has run major trading operations on both sides of the Street. If there’s a smarter fellow in finance, I have yet to meet him. You may not agree with his view but as I’ve learned over the last twenty years, it should definitely be respected.
Two Plus Two Equals Four
Financial companies are desperate for capital but their stock prices are so low that any issuance would be dilution death for the companies. The government is desperately trying to keep the financial system together. Add that up and you get the possibility of a great manipulation.
How would the government engineer a rally in financial stocks so that these companies can sell stock to raise capital at a reasonable or at least palatable dilution level?
It might go something like this. Since financial stocks are in such trouble they have heavy short interest; this is natural and well known and can be used to their advantage. A clever “berry” might think to introduce confusing rules that raise the cost of borrowing short stock and temporarily confuse shorts into covering and not shorting more. And this is precisely what the SEC did.
It seems innocuous to most folks, but it put stock loan desks and dealers in complete disarray. New short sellers could find no stock to borrow and many existing short sellers were forced to cover as the technical rules forced allocation of loans at much higher costs.
For example, the rebate rate on Fannie Mae (FNM) the day before the SEC announcement was 1%; the day after it was -5%. Many who were short the stock were forced to cover, thus driving the stock price up.
But this alone would only drive stock prices up so much. The clever berry needs a catalyst, one that would force panic buying into now truncated supply.
It just so happened that the new SEC rules came conveniently the day before many of these financial companies were to report earnings. If just some how these earnings were really good the match would be lit on the kindling.
So far banks have miraculously come through on their end of things. Wells Fargo (WFC) and JPMorgan (JPM) reported better than expected beaten down earnings. Things must be getting better just as the companies need capital.
What a coincidence.
But if you look at how the banks “beat” their earnings the coincidence becomes clear. WFC took the unprecedented step of extending charge-off acknowledgment from 120 days to 160 days. This allowed the bank to move less capital to loan loss reserves and report better than expected horrible earnings. And JPM was even more aggressive. It actually lowered its loan loss reserves quarter to quarter.
The list of financial companies where shorting regulations are being enforced/enhanced is precisely the banks and dealers (and FNM/Freddie Mac (FRE)) that have access to the Fed’s balance sheet (dealers through the PDCF and FNM/FRE through the recently-allowed access to the discount window). So we can speculate on the nature of the ‘’coincidence'’: Perhaps the Fed is getting worried about the value of all that collateral these dealers have posted to the Fed balance sheet and must boost the capital of these companies to protect that value.
And now on cue FRE, a $5 billion market capitalization company wants/needs to issue $10 billion in new stock? Doesn’t that sound a little crazy? Well get ready for others to do the same because the banking system needs capital desperately and the government is there to help.
But help at the expense of who?
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At the end of the day there is nothing we can do about it but store it in the memory. There was no substance to the rise of the last few days, just another attempt by the FED and the banks to move the goalposts yet again. All we can do is change hats and go with it for as lond as it lasts (well, not me as I’m out for the duration of my hols. It will be interesting to see how this manifests itself.
July 19th, 2008 at 9:36 am
Hi FT,
Maybe the message is finally hitting home that it is the FED that are the problem in all this mess and their dreamed up policies, bailouts, interventions, manipulations or whatever name they care to give it will just serve to prolong the agony. Why don’t they just take their medicine, let the unscruplous mortgage lenders and insurers go to the wall and clear out the rotten apples. The DotCom bubble was a walk in the park compared to this. That was mainly confined to the tech market. This crisis is much more far reaching and widespread.
The FED are trying everything in their power, resorting to stopping people ’shorting’ 20 financial stocks.!!!!!!!!
Well maybe their plans are starting to be seen for what they are as highlighted in the questioning of Brenanke by Senator Fred Bunning below:-
Thank you, Mr. Chairman. I know we have a lot of ground to cover today, but I want to say a few things on the topic of this hearing and of the next.
First, on monetary policy, I am deeply concerned about what the Fed has done in the last year and in the last decade. Chairman Greenspan’s easy money in the late nineties and then following the tech bust inflated the housing bubble and created the mess we are in today. Chairman Bernanke’s easy money in the last year has undermined the dollar and sent oil to new record highs every few days, and almost doubling since the rate cuts started. Inflation is here and it is hurting average Americans.
Second, the Fed is asking for more power. But the Fed has proven they can not be trusted with the power they have. They get it wrong, do not use it, or stretch it further than it was ever supposed to go. As I said a moment ago, their monetary policy is a leading cause of the mess we are in. As regulators, it took them until yesterday to use power we gave them in 1994 to regulate all mortgage lenders. And they stretched their authority to buy 29 billion dollars of Bear Stearns assets so J.P. Morgan could buy Bear at a steep discount.
Now the Fed wants to be the systemic risk regulator. But the Fed is the systemic risk. Giving the Fed more power is like giving the neighborhood kid who broke your window playing baseball in the street a bigger bat and thinking that will fix the problem. I am not going to go along with that and will use all my powers as a Senator to stop any new powers going to the Fed. Instead, we should give them less to do so they can do it right, either by taking away their monetary policy responsibility or by requiring them to focus only on inflation.
Third and finally, since I expect we will try to get right to questions in the next hearing, let me say a few words about the G.S.E. bailout plan. When I picked up my newspaper yesterday, I thought I woke up in France. But no, it turns out socialism is alive and well in America. The Treasury Secretary is asking for a blank check to buy as much Fannie and Freddie debt or equity as he wants. The Fed’s purchase of Bear Stearns’ assets was amateur socialism compared to this.
And for this unprecedented intervention in the markets what assurances do we get that it will not happen again? None. We are in the process of passing a stronger regulator for the G.S.E.s, and that is important, but it allows them to continue in the current form. If they really do fail, should we let them go back to what they were doing before?
I will close with this question Mr. Chairman. Given what the Fed and Treasury did with Bear Stearns, and given what we are talking about here today, I have to wonder what the next government intervention in private enterprise will be. More importantly, where does it stop?
GP
July 19th, 2008 at 9:40 am
Hi Aaron,
I’d keep a tight lease on any long positions if I were you. As can be seen from my previous posts, the rise in the US markets is again down to a new FED fiddle. Nothing fundamentally has changed and the rug could be well and truly pulled once the short covering is sold off.
GP
July 19th, 2008 at 4:51 pm
Gazza, get a load of this…and anyone else who thinks the above might just be sour grapes. Spooky man. Does history really repeat itself?
.youtube.com/watch?v=_dmPchuXIXQ
.youtube.com/watch?v=lBZne09Gf5A
.youtube.com/watch?v=SjUrib_Gh0Y
.youtube.com/watch?v=_BVNN1wqw3k
.youtube.com/watch?v=VPPFgHF9VR4
…watch if you dare.
July 19th, 2008 at 8:56 pm
Hi Aaron,
Truly scary.
By the way, none of those posts were written out of sour grapes. I’ve been the victim of the FED’s antic’s but I’ve also been the beneficary on numeroys occasions. I’m disgusted & appalled that the FED are allowed to take the actions that the do and if you’ve ever visited the Minyanville site or googled Ron Paul, you’ll find there are a lot of people who are beginning to feel the same way.
You’ve probably not been in this business long enough to witness the Paulson Plunge Protection team in action but you will. They’ve been pretty conspicuous by their abscence in recent weeks but it usually manifests itself as a huge reversal of falling US markets at 7:30pm approx. our time. Bloomberg can usually manage to come up with some far fetched reason for this happening but anyone who can believe the garbage that they come out with needs help. Didn’t see any reference to how Wells Fargo and JP Morgan manipulated their figures reported on Bloomberg. Did you?
The FED/US government now has its people exactly where it wants them, up to their necks in debt and credit. What they didn’t anticipate is that so many people would just walk away from their properties, foreclosing on mortgages that they should never have been sold in the first place. Every policy that the FED/ Treasury has come with to ’support’ homeowners has had one underlying them. To keep homeowners in their home as long as possible to recoup a little bit more money for the banks.
The FED are a bunch of shysters who will do anything in their power (and several things outside of their juristiction) to make sure that their banker mates do not suffer. Lets face it, they knew exactly what they were creating by ploughing in the billions and billions of dollars to their financial system, inflation. High prices in shops and at petrol pumps are not the cause of inflation, they are the result.
But, as traders, rather than investors, although we need to be aware of this, at the end of the day we only need to blindly follow the direction of the market, nothing more nothing less. If my sytem tells me the market is on an uptrend then I will follow and if it turns the other way all well and good. But when we get a situation where it’s virtually impossible for the price of 20 financial stocks to fall then it makes it a trifle difficult.
Right, enough of my rantings on a Saturday evening. Good luck to everbody in their trading in the next two weeks. I will be doing my best not to even look what the markets are doing but I’m sure I’ll take a quick peek from time to time and I’ve also managed to get the PP blog on my mobile, so I’m sure the comments will keep me amused.
GP
July 21st, 2008 at 10:30 am
Blimey guys, saturday blogs. Is there no sport on. Just dashing out so i’ll have a full read later. Gazza, forget the markets and have a great holiday.
July 21st, 2008 at 3:54 pm
Hi FT,
I was flicking between the golf and the Tour De France while I was watching the You Tube clips from Aaron. As he said ‘Does history repeat itself’. I think we all know the answer to that one. It does and it is.
GP
July 21st, 2008 at 4:05 pm
I don’t buy it. The US is not so much Land of the Free as Land of the Conspiracy Theorist. If I wanted to push some pet theory, I’d present the arguments for and against, analyse them on their merits and present a conclusion based on the facts.
This Zeitgeist stuff, like others of its ilk, is a stream of unsubstantiated claims linked by out of context and selectively edited quotes with no attempt to present the other side of the coin to allow us to reach conclusions of our own. The odd piece of uncontrovertibly factual material is inserted to give a veneer of credibility to the wilder claims.
I’m not saying there’s no truth in it somewhere, but I always think people take this sort of approach when they’re unable to build a case on the basis of the complete facts and instead resort to selectively presenting you the “facts” and the conclusions that they want to push.
July 21st, 2008 at 5:06 pm
Hi Ken,
As I said earlier, as long as we’re aware of the tricks the FED/SEC get up to, and banks in their reporting of their results, then at least we are forewarned. We all knew that the markets were due some sort of bounce and unless the financials were able to provide it there probably wouldn’t have been one.
The Zeitgeist stuff may seem a ‘bit’ extreme but the statement from Jim Bunning and the piece from Minyanville just go to confirm my own personal view that I just don’t trust the FED or Paulson. How about you?
GP
July 21st, 2008 at 6:11 pm
Hi Ken,
I am with you on the matter of how the director of a documentary should approach his/her material; anyone with the slightest bit of common sense would also agree with you there… but where is the entertainment value in that??? What this stuff implies is horrifically nasty and funny, but if it’s true then god help us all. My worst ideas on human nature will be confirmed… but how could anyone be that bizarrely dominant and greedy?
Even if it was “all” true, i don’t think i would ever want to believe it. It blew my mind the first time i seen it because you cant readily disprove what it implies, and you can’t un-watch it after you have watched it. A bit like Richard Dawkins book The Selfish Gene, i couldn’t exactly unread that after i had read it, even though it made me feel extremely uncomfortable having digested it. But to disprove it there and then and get my old state of mind back would have taken something i did not and still don’t (never will) possess.
The guy that did zeitgeist also did a hatchet job documentary on religion; it was more or less in the same style…no one gets out alive. Bit like my trades today.
July 21st, 2008 at 6:24 pm
Hi guys,
just back from lunch with the accountant. I see that equities were higher, cable’s higher than when I left and BoA had some ’stunning results’. I ‘ve now got 99 e-mails to read, several blogs on US conspiracy theories and arrange a match with some mini-rugby touring team. Busy, busy , busy.
lunch was expensive but extremely pleasant.We had an outside table, 10 feet from the beach and my accountant is an intelligent and very attractive 24-year old. She’s also my daughter as well as my accountant, but much business was discussed.