By Hedge Ly
*While you are reading you should listen to this track it gets you pumped...
How is THAT for some insanely suspicious timing! Man Benny boy really knows how to ruffle some feathers! I did not know Benny was such a great market operator! I can picture him yelling at Geithner this morning:
Benny: "TIMMY! Get over here I got a wild hair, tell your boys over at JPM to run this market straight up after 1 o'clock, I want you to sell everything and get short into the close"
Timmy: "Why?"
Benny: "Because i am gonna raise the discount rate .25% minutes after the close!"
Benny: "YEP, ill give the conspiracy theorists a one up on this one!"
Timmy: "Have you lost your mind.. like me"
Benny: "Well actually to make a long story short... i misplaced the screen saver password on the PPT computer.... it is stuck on BUY BUY BUY. Raising the emergency rate is the only way to turn it off, dont tell anyone."
Timmy: "Your secret is safe... your a genius i really thought we were F*cked"
Obama: "Good work guys, does this mean i can have a press conference?"
OK,OK The fun is over, the reality of the situation is tomorrow is OPEX, you may or may not know this Fed move is not good for the markets. The Fed is trying to "cool the jets" of the market, the "fed exit strategy" is now in step 1. The fed said "WE" are waiting to raise rates, "for some time".. i guess the time is now. It appears GS knew something was up, as its trading was flat and underwater all day today..
Now that the free money program has entered its initial wind down phase we can rest assured the endless march upward will be severely impacted. I do not know how many points all the delta hedging and position squaring ahead of OPEX will shave off the SPOOZ, currently we are down 10 handles as of 7:12 Eastern. Most traders in NYC were away from the desk when the news hit about a half hour after the bell. I believe we will see more of a reaction in the early morning hours as NYC comes back on line.
With OPEX being tomorrow we could be in for an exciting day of trading, uncertainty is always good for trading. Traders will be scrambling to get all their positions hedged, or they will simply blow out of positions and flip the trade around. All of this depends on how hard they take us down, or if we get some sort of intervention before the morning session starts. Overnight interventions used to be a specialty of the previous fed. I personally feel nothing will done, the fat lady is signing.. The PPT ran the markets up from 1 o'clock on into the close, everyone who followed the "jubilance" now are holding the bag.
Be on your toes tomorrow anything can happen, you can see wild swings as traders are forced to swing huge size around at the open if we gap down hard.
Off topic:
On twitter today i was having a few conversations about how the market is almost "untradable" *on an intra day basis..What i mean by this is there is never a clear trend and a trend never lasts more than an hour. This type of market pushes up your transaction cost while diminishing your revenue trade profits because of the tight flip flopping trends. Any intra day trader will tell you movement coupled with volume and a catalyst is what we thrive off of. That being said this market has had slow moving ranges with almost zero catalyst beyond the "obvious" upside manipulation by way of almost free money given to banks to pump into the capital markets. Once the money is gone, maybe we can get a flush of the system and a legit recovery can begin. This recovery begins with real estate and confidence in our capital markets being restored. period.
Good luck on OPEX.
p.s. the rate raise party starts at 8pm. bring the rose...
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