Market Recap Monday February 6, 2012- Macro Story

Market Recap Monday February 6, 2012

Some odd price action in equity, currency and credit markets today which further supports the theory discussed earlier that we are witnessing a deleveraging process (Deleveraging Process). That theory is pure speculation but considering the events in Europe and the increased probability of a Greek default it is more probable than not that big banks are getting more liquid not less.

Deleveraging would also explain this very odd price behavior. For example today gold was very weak on the session down over 1% at one point. Oil and copper were also weak even though the USD had come off

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Tony

A Boston native, I now live in Denver, Colorado with my wife and two little girls. I trade for a living and primarily focus on options. I love selling theta and vega and taking the other side of a trade. I have a solid technical analysis background but much prefer the macro trade. Being able to combine both skills and an understanding of my "emotional capital" has helped me in my career.

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David Evans

02/6/12; 5:41 pm

Tony — interesting comments about the close. I use 5 minute charts and the market was drifting lower 3:45 to 3:55 and the last bar rocketed up. No like a normal closing out of shorts move – so, I think you are probably on to something with your comments

Phillip

02/6/12; 5:42 pm

More May 2008 analog:

http://stockcharts.com/h-sc/ui?s=$NYSE&p=D&yr=6&mn=0&dy=0&id=p44669793908&a=255733938

chris

02/6/12; 7:16 pm

Very interesting chart Phillip, mucho thanks.

Phillip

02/6/12; 8:48 pm

Here’s an interview with the analyst who provided the Eurodollar COT correlation – he seems to corroborate indirectly what Tony is saying:

http://bloom.bg/wJUOmq#ooid=Y4M2dnMzqhmyqtyuC70UFitYBeC55D24

pezhead9000

02/6/12; 10:24 pm

Thanks!

eric

02/6/12; 10:27 pm

thanks for sharing Phillip. I’ve heard of following rydex money market balances and the rydex levered bull / bear funds as well. the ratio of funds invested in the levered rydex bull compared to bear funds peaked a few days ago at July 2011 levels and has been coming down since. the same thing preceded a big move down as well…we’ll see what happens i guess

Kevin

02/6/12; 11:30 pm

Tony
Really enjoy your website.
Zerohedge had a discussion couple months ago @ the effects of hypothecation & re-hypothecation. One author argued that the deleveraging of these positions could cause a paradoxical rise in the markets.Interesting.

Kevin

eric

02/6/12; 11:34 pm

for what it’s worth, the rydex bull/bear levered asset ratio is back up to the level it was a few days ago – highest since july 2011; total assets in levered bear funds are at multi year lows right now (since at least october 2008)