It now appears that Senator Kerry is in a much weaker position than Al Gore was 4 short years ago. The vote difference is wider and (so far) there do not seem to be as many complaints about the process. The futures weakened from my early AM post but are now clawing back those gains and will probably soar as they are above the Oct highs. For my part I will continue selling longs into it but will wait until after at least 11 AM to do so.
Better trading opportunities are outside of equities for me. I did not feel that the election uncertainty or a possible Kerry victory was pressuring the market so it is difficult for me to have faith in the rally. The trading environment should remain the same with plenty of big swings around any trend that emerges.
Nov 3, 2004
History repeats itself
Well S&P futures are trading at 1146 on globex but it looks a bit premature. So far the map is a repeat of 2000 with the exception of New Hampshire which has switched to Kerry. NBC has given Ohio to Bush but the Dems are not going to concede it. There was already some legal wrangling there with make shift ballots being handed out to people standing in lines and polls being kept open later than planned.
The oddest thing about it is that the NBC seems to be expecting Kerry to concede even though the vote difference in Ohio seems quite small relative to numbers for absentee ballots and provisional ballots. Andrea Mitchell is now saying that the provisional ballots are greater than the difference.
The oddest thing about it is that the NBC seems to be expecting Kerry to concede even though the vote difference in Ohio seems quite small relative to numbers for absentee ballots and provisional ballots. Andrea Mitchell is now saying that the provisional ballots are greater than the difference.
Nov 2, 2004
Oye!
From Bloggerman
"Secaucus - John Zogby’s polling was generally considered the most accurate during the crazed 2000 election, and if he maintains that measure of reliability, you can go to sleep now. Zogby's final tracking poll, state by state, released at 5:30 EST, suggests the prospect of a Kerry win by a margin of 311 Electoral Votes to 213, with only Colorado and Nevada too close to call (and representing just fourteen votes between them).
Oh and by the way, he has Mr. Bush winning the popular vote, narrowly- an irony of biblical proportions that one Democratic pollster rated a one-in-three chance just last week.
It should be noted Zogby is doing a lot of extrapolating. In the two from Column A (Florida, Ohio, Pennsylvania), two from Column B (Iowa, Minnesota, Wisconsin) states, he gives them all to Kerry. But Florida, Ohio, and Pennsylvania are listed as "trending Kerry" based on exit polling. The smaller three states show Kerry up by 5-6%."
"Secaucus - John Zogby’s polling was generally considered the most accurate during the crazed 2000 election, and if he maintains that measure of reliability, you can go to sleep now. Zogby's final tracking poll, state by state, released at 5:30 EST, suggests the prospect of a Kerry win by a margin of 311 Electoral Votes to 213, with only Colorado and Nevada too close to call (and representing just fourteen votes between them).
Oh and by the way, he has Mr. Bush winning the popular vote, narrowly- an irony of biblical proportions that one Democratic pollster rated a one-in-three chance just last week.
It should be noted Zogby is doing a lot of extrapolating. In the two from Column A (Florida, Ohio, Pennsylvania), two from Column B (Iowa, Minnesota, Wisconsin) states, he gives them all to Kerry. But Florida, Ohio, and Pennsylvania are listed as "trending Kerry" based on exit polling. The smaller three states show Kerry up by 5-6%."
Tags:
Election
Swinging
I have now jettisoned a few longs (telecoms and transports) and covered some shorts (metals). The longs went because I had to sell something into this up move which was a bit unexpected and poorly timed considering the news backdrop. The metals have hit their downside targets. I could be very early on that since the dollar is just starting to bounce but I would rather play tight as the overall trend in metals looks higher.
Maybe I will put some new trades on in the afternoon but for now am just waiting to see how high this rally goes.
Maybe I will put some new trades on in the afternoon but for now am just waiting to see how high this rally goes.
Uncomfortable rally
I find this rally more and more unsettling for the short-term. I have a pretty constructive view for the long run but I simply do not like this bold leap higher in front of an unknown. Positioning for a post-election rally made sense if their was pre-election anxiety but that is just not the case. I am going to trim some longs here and perhaps throw out some shorts into the close. If tomorrow's open is higher that is probably the best time to short. It will just be hard to count on a higher open given the amount of news coming overnight.
Trading your emotions
The most important lesson I have learned in trading is that predicting which way the market will move is only about 10% of the game. The odd thing is that it is predictions and opinions that completely dominate the news coverage. Brokerage reports indicate price targets and pundits always declare either a bull or bear market. For me I have found that the day to day volatility overwhelms such insights even if they are correct. After watching the markets for several years, recognizing a trend becomes easy but actually participating in it is always difficult.
If prediction is 10% what is the other 90%? Risk management. How to set stops and take profits to minimize your own emotional reactions. That is where the money is in trading. Taking profits when others are euphoric and having capital to buy when others panic. For me, a large part of this involves keeping position sizes relatively small and if I make a bigger bet I do it in the options market to cap the loss.
I have been reading my own posts and generally realized it fits pretty well into the "predict the markets" mold. While it is important to have a game plan and future expectations the actual position management is really what dominates long run performance. From now on I will try to focus more on that management. It may get cumbersome at times with repeated stops being hit in the same trade before I give up or the trend works out but I believe it will add value by seeing how good risk management actually creates the profits.
I called this post "trading your emotions" because that ultimately is what risk management accomplishes. It is impossible to tell if the market is irrational when you are not rational yourself. To keep my mind clear and open to both sides of the market I manage my positions so that I literally don't care which way the market moves.
If prediction is 10% what is the other 90%? Risk management. How to set stops and take profits to minimize your own emotional reactions. That is where the money is in trading. Taking profits when others are euphoric and having capital to buy when others panic. For me, a large part of this involves keeping position sizes relatively small and if I make a bigger bet I do it in the options market to cap the loss.
I have been reading my own posts and generally realized it fits pretty well into the "predict the markets" mold. While it is important to have a game plan and future expectations the actual position management is really what dominates long run performance. From now on I will try to focus more on that management. It may get cumbersome at times with repeated stops being hit in the same trade before I give up or the trend works out but I believe it will add value by seeing how good risk management actually creates the profits.
I called this post "trading your emotions" because that ultimately is what risk management accomplishes. It is impossible to tell if the market is irrational when you are not rational yourself. To keep my mind clear and open to both sides of the market I manage my positions so that I literally don't care which way the market moves.
Tonight's news
Tomorrow is shaping up lower with bad news out of NSM (National Semi) and ABN Amro. Off the cuff the NSM number seems worse just because the ABN news is backward looking.
I wanted to post a chart of the commodity Research Bureau Index but am experiencing some technical troubles. It shows a double top over the last couple of weeks with a sharp stochastic divergence. It is heavily effected by oil but the charts of Gold, Silver, HUI and the XAU all show similar short-term weakness. And of course the dollar is sitting at support. All these things point to weaker commodities and a stronger dollar. It will be interesting to see how the market responds to the action. On the face it seems bullish as it shows that commodity prices are not out of control.
I wanted to post a chart of the commodity Research Bureau Index but am experiencing some technical troubles. It shows a double top over the last couple of weeks with a sharp stochastic divergence. It is heavily effected by oil but the charts of Gold, Silver, HUI and the XAU all show similar short-term weakness. And of course the dollar is sitting at support. All these things point to weaker commodities and a stronger dollar. It will be interesting to see how the market responds to the action. On the face it seems bullish as it shows that commodity prices are not out of control.
Nov 1, 2004
Launchpad
The dollar is seeing some good strength today and I like that pattern much better for a post election rally. It had a small bounce off the 85 level Tuesday, pulled back and retested it, and is now sitting on a launchpad if there is a quick resolution.
I would add to that foreigners may be less familiar with Bush and Kerry and may avoid election uncertainty as a matter of course. That might lead to a more tradable reaction in the currency.
I would add to that foreigners may be less familiar with Bush and Kerry and may avoid election uncertainty as a matter of course. That might lead to a more tradable reaction in the currency.
The action so far
The most notable move is in crude oil which opened higher and has now reversed below 50. The upside was explained by some Nigerian news but their is no news with the reversal. To many buyers on the bounce I guess. The drillers are only now being pulled lower by the move.
The oil move seems mostly like a trading phenomenon but there was weakness in foreign bonds overnight and we are now seeing weakness in US treasuries too. Bonds apparently giving back some of the "flight to quality" gains of last week. Metals are weakening after a higher open and perhaps there is some fear of weakening demand for commodities. Does not really fit with higher bond yields but bonds have been trading a bit counterintuitively with goods prices.
Still expecting some weakness in the semis and technology. If we don't see stocks give back some of last weeks gains I would probably view a Wednesday morning pop as a shorting opportunity.
The oil move seems mostly like a trading phenomenon but there was weakness in foreign bonds overnight and we are now seeing weakness in US treasuries too. Bonds apparently giving back some of the "flight to quality" gains of last week. Metals are weakening after a higher open and perhaps there is some fear of weakening demand for commodities. Does not really fit with higher bond yields but bonds have been trading a bit counterintuitively with goods prices.
Still expecting some weakness in the semis and technology. If we don't see stocks give back some of last weeks gains I would probably view a Wednesday morning pop as a shorting opportunity.
Follow the bouncing ball
As the USD bounces this morning, I am thinking a bit about just how crowded that short is. I am not sure I have ever seen a trade in 10 years that is so widely believed in. Even I believe in it. Because it is crowded though I will watch carefully as the DXY (Dollar Index) approaches that 87 level. I will also consider other shorts against Asia (like GBP/JPY) before getting into dollar positions.
Also, the Reserve Bank of Australia, ECB, and Bank of England all have meetings this week. The election is distracting a lot of people but these meetings are significant because both Australia and Britain nearing the end of their rate hikes. At the turning points the markets will focus on nuances to see what to expect next. And of course the FOMC meets next week for what should be its last rate hike for a while.
Mostly I am looking through the election because it is ungamable. The candidates will only make subtle differences to the markets and even a tied election will eventually get resolved. Life will go on pretty much the same as it is today.
Also, the Reserve Bank of Australia, ECB, and Bank of England all have meetings this week. The election is distracting a lot of people but these meetings are significant because both Australia and Britain nearing the end of their rate hikes. At the turning points the markets will focus on nuances to see what to expect next. And of course the FOMC meets next week for what should be its last rate hike for a while.
Mostly I am looking through the election because it is ungamable. The candidates will only make subtle differences to the markets and even a tied election will eventually get resolved. Life will go on pretty much the same as it is today.
Tags:
Australian dollar,
British Pound,
dollar,
Election
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