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Hi Jeff:
>If the tick chart reflects reality, word out of the Fed took the bottom out
>of the market. A instant 20-tick drop. A few short trades later, the
>market rose a full point. And a few ticks later ..back to even.
The ticks were real. The initial reaction was to hit the bid and I think a
lot of shorts had built over the hours leading up to the announcement in
expectations that a 25bp cut would send prices lower, when we got back to
even again many of these shorts had to scramble to get out.... (note the
10,000 contract drop in OI).
Who had the guts to hit the bid as the market moved back into the 130.00
zone.... I know it wasn't me, but the offers were real and the subsequent
decline found buyers (or at least an absense of sellers) again.
I suspect that the climb toward the close was in reaction to the weaker
shares.
>Because looking at a chart, I'm
>trying to figure out if this situation would have...
>
>a) Crushed me if I was in.
>b) Made me money if I got in
>
>Somehow, I doubt either would have been possible.
The answer is .... Yes.
In terms of short term trading I don't see much advantage into entering
positions into high volatility events. Ususally you just end up getting
whipped across the board. I like to have some sense of control. I don't
even have positions in the bonds (except for intermediate or long term)
going into the monthly employment report. I like the feeling (even if it is
illusionary) of being in control.
Good luck,
Stewart.
Stewart Taylor
Taylor Fixed Income Outlook
Voice: 501-219-9774
Fax: 501-228-0963
E-Mail: staylor@xxxxxxx
Web Site: http://www.cei.net/~staylor/
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