Wall Street Watchman

Greek Roller Coasters

2012-02-22T15:59:00.000-05:00

Have you ever seen in your life a bond with 20 days left before expiration moving 7 big figures in one day?I think that NO ONE really knows the "fair price" of this bond: it could be anywhere from 0 to 100....some hedge funds believe that they can be repaid at par some believe that Greek Courts may rule in their favor and get more than what they could get with the PSI. Some others think that in

Greece Second Bailout

2012-02-21T01:27:00.004-05:00

"The Eurogroup welcomes the agreement reached with the Greek government on a policy package that constitutes the basis for the successor program". Full StatementThis is the "funniest" part: I read...."introduce in the constitution that priority is granted to debt servicing payments"...like saying that Greek people can starve to death yet they must be subordinated to the ECB ....this is too much

Greece

2012-02-16T17:24:00.001-05:00

Traders are sick and tired of hear about EU summits and Greek bailouts...and they may well be right so I will not comment on the daily EURUSD headlines driven swings, it makes no sense. It may be more interesting to discuss about the big picture: there are rumors about the troika plans to let Greek default (interesting post from the Slog here). Let me tell something to the Troika: this will not

Weekly Roundup

2012-02-10T16:10:00.003-05:00

Earlier today I was reading this article about Greece already printing its own money (very interesting read), this is not really a news, you could find this information already last December from the IMF country report n 11/351 of Dec 2011 (from page 6): We are not talking about literary printing drachmas but expanding BofG balance sheet to keep the Greek whole banking system afloat. Come on

EURCHF floor update

2012-02-07T09:08:00.003-05:00

Few days ago I was commenting on the EURCHF peg while this pair was dangerously close to 1.20 and I was wondering what could possibly happen to all stops being placed just below 1.20 in case of a temporary breach of that level (maybe overnight maybe during the Asian trading session). With almost 90% of retail brokerage account trying to front run the SNB going long the EURCHF just above the

Tic Tac

2012-02-06T10:37:00.003-05:00

Greek 1 year yield over 500% (from Bloomberg) Deposits at the ECB over 500B Something is boiling below the surface....and yet protection (VIX) is cheap and almost 90% of retailers are long EURCHF. Data from Oanda forex broker: retailers are ALL long EURCHF ...if it slips few pips below 1.20 (maybe overnight with low liquidity) where are going to be executed these stops? SNB will intervene yet

Weekly Closing Roundup

2012-02-03T16:42:00.001-05:00

The volume-less and correction-less advance in equities continues and this low volatility advance really makes it very difficult to do something on this market these days, boring and frustrating. Some other markets are looking much more interesting: A bullish position that I like is Wheat: Wheat March 12 contract The March Wheat Contract shows a potential Bullish Head and Shoulders whose

Food for thought

2012-01-31T16:37:00.000-05:00

Financial markets always take the least expected route....

EURCHF intervention closer?

2012-01-31T12:14:00.003-05:00

Yesterday I posted my view about the intervention treat on the EURCHF and I also explained that if I was the SNB I would let the pair cross the 1.20 mark and intervene from below to be more effective. Apparently I am really a minority voice on this issue: today @DRodriguezFX posted this picture on Twitter (many thanks!): .... As you can see almost every retailer is long the EURCHF waiting for

Economic updates: Italy and Canada

2012-01-31T09:33:00.004-05:00

A quick look at the latest economic releases out from Italy ( when I published this article about the Italian 20 years cycle of financial crises I promised to keep you updated on the Italian Economy). As you know without growth the painful fiscal adjustment process undergoing in Italy may result in a useless exercise. In my opinion if Italy goes so does the Euro so the Italian credit market must

Knocking at SNB doors: Swiss Franc floor tested

2012-01-30T10:42:00.004-05:00

Knock Knock ....Mr Market is knocking at SNB' doors (today 1.2042 given on EUR/CHF ). That the EUR/CHF could test the 1.20 floor following the resignation of Philipp Hildebrand was to be expected and here we are now: less obvious (perhaps) is what's gonna happen now. The closer we move to 1.20 floor (or peg if you like) the higher the expectations of SNB intervention after Mr Jordan

Friday evening

2012-01-27T16:39:00.000-05:00

Another solar flare from Sunspot 1402, few minutes ago: this one is really big: a class X2. Fortunately Sun Spot 1402 does no longer face directly the Earth so the upcoming geomagnetic storm will not be so severe and the market may be spared another time. Nevertheless I remain in "risk off" mode for the week-end... By the way Earthquakes are also likely with this kind of solar activity ( I

Wednesday post FOMC update

2012-01-25T16:28:00.000-05:00

Yesterday geomagnetic storm was a moderate G1 class, however the "panic buying" mode we saw today on the market is consistent with increasing emotional participation and in these situations fear can return just as quickly. Risk is not "off" for me....note in the chart below how the daily range is already increasing while the VIX is forming an hammer and stocks are running in long term resistance

Tuesday Closing Update and Geomagnetic Storm Warning

2012-01-24T16:01:00.002-05:00

A strong geomagnetic storm is ongoing since a CME hit our geomagnetic field earlier today: Induced Ground Current in Lofoton Norway courtesy of Rob Stammes Courtesy of NASA What all this has to do with the stock market? My opinion: look at the chart below it is self explanatory...there is a recurring pattern since last year (it has not always been so). I expect an increase of volatility in the

Monday quick update

2012-01-23T16:20:00.002-05:00

Last Thursday we warned that a solar flare was expected to hit our geomagnetic field causing a geomagnetic storm during the weekend and that this event could bring some volatility back, eventually. The Geomagnetic storm hit Monday early Morning UT (Sunday late night ET): Not surprisingly the VIX gapped higher early this morning: Vix closed at 18% on Friday and opened at 19% this morning Another

Market Closing Notes

2012-01-19T16:03:00.002-05:00

Ending a long streak of inactivity today a Sunspot (n 1401) erupted releasing a M3 class solar flare directed toward the Earth: it may cause a geomagnetic storm over the next 48 hours. Two things to be noted here: when the solar flare was released the SPY topped. Remember that increasing solar activity (beyond certain levels) is associated with increased volatility and if the Sun surface wakes

Liquidity Flood

2012-01-19T09:00:00.001-05:00

Some of you may wonder what's going on? During the last 24 hours it' s all "risk on" mode across the board. That's a because of the liquidity flood from the ECB effective yesterday the Reserve requirement was lowered to 1% freeing some 100B Euros and today the Deposit Facility is also 100B lower than yesterday. This flood of liquidity is creating the perception that all is fine and the worse is

Deposits Dynamic and Reserves Coefficient Drop

2012-01-18T05:33:00.003-05:00

Looking at the latest Bank of Italy data (Nov11 from the BOI January 2012 Statistical Bulletin) the Italian Banking System is still slowly loosing deposits: Italian Banks Liabilities with Italian Residents: Total Deposits (Residents) in Blue, Checking account in black dashed (red is banks' own corporate bonds) In Italy the bleeding is slow so far but in Greece it look restless: Greek Total

Behind the scenes

2012-01-17T16:09:00.000-05:00

By looking at the recent price/volume patter of the ES March contract it would seem that higher prices are used to unload stocks....signs of distribution and slowly deteriorating technical picture despite the price advances.Note the volume bars pattern: the higher the prices go the smaller the green buying volume RSP lagging SPY: fewer stocks participating and finally: European Banks still

Weekly closing roundup

2012-01-13T16:28:00.001-05:00

Today we got what we were waiting for: the first sign of technical weakness of some sort after the strong start of the year. Today I focused my attention on the initial sell off with increasing volume: the afternoon volume-less squeeze to me is more a confirmation than a reversal of the initial move. The charts that I am going to post below point to a deteriorating short term technical picture:

EURCHF: Swiss Franc Peg with Euro an analysis

2012-01-12T04:57:00.000-05:00

The recent resignation of SNB chief Hildebrand has drawn attention back to the EURCHF peg. Is the EURCHF peg sustainable? Is it credible? Will it last? Does it make sense? I will try to answer to these questions with the classic WSW approach: macroeconomics analysis, cycle analysis and traders' common sense (something that central bankers often seem to have lost on their way...) . Having worked

Important juncture

2012-01-10T16:04:00.000-05:00

Last time I posted "..So as I see it, stocks have raised on low volume with little participation...ideally I would like to see the stock market trying to marginally break above the resistance area (see charts above SPX 1290-1300) and reverse lower with volume: that would be something that would make me feel less hesitant to pull the trigger...." today, eventually, the SPX tried to break out to

Weekly Roundup

2012-01-06T16:13:00.000-05:00

Earlier this week I wrote that I was not in a hurry to go against raising US equities, I was probably right considering the stocks not only did not sell off but they closed near the high for the week with some notable bullish upside breakout (MSFT , XLI , BBH among others). To be in a hurry in order "to pick a top or a bottom" is a recipe for disaster: a trader should always wait for some

A banking tale....Unicredit

2012-01-04T13:32:00.003-05:00

Unicredit SPA: the largest Italian bank and one of the biggest in Europe with 900+ Billions of assets. Disclaimer: I have never had a position on this stock; I have not currently a position on this stock and I will likely never have a position on this stock...as you know and as the name of this blog suggests I prefer Wall Street stuff and those commodities traded in Chicago...Anyway, why am I

Interesting start of the year

2012-01-03T16:30:00.002-05:00

These are the charts I am watching as the new year starts: USDCAD: Long term bullish, short term consolidation, now on support. Buying interest should prevent prices from slipping below parity and once a base is formed another bullish leg may form. definitely a chart to be monitored. Copper: well defined long term bearish structure, consolidating into a triangle in the short term, we are