The collision of global markets and social mood

Thursday, May 2, 2013

The Hottest Trade In The World

What a nice day to wake up and not have to drive. I can work all day. I am lucky to be able to say that and truly mean it.

Futures are ripping on the ECB's surprise decision to cut the marginal lending rate from 1.5% to 1%. I think they're ripping simply because the decline from the S&P's record high has been sloppy and overlapping.

Amazingly, volume contracted on a down day yesterday. There was a down tick below -1000 finally, but it was not a breakout by any means when compared to previous down ticks since February.

I did overlook an important level in yesterday's post: 1577.56. A break of that could yield a deeper retracement to the 61.8% or 78.6% levels, roughly 1560 and 1550 respectively. But I'll be watching the 1590.79 level above for clues.

The longer the S&P lingers just below 1600 with choppy waves, the more strength it can gather to blow through the 1607 target. The same method that yielded two coincident 1607 targets extends to 1665 and 1672. On a weekly basis, incredibly there is a 1:1 multi-year target of 1778.56.

As much as I think these numbers are crazy, there they are. And until levels below get broken, there they'll remain. But I won't be changing my strategy or swinging for the stands. I'll leave that to others such as Mark Cuban.

Mark Cuban just did a Bill Ackman. Cuban announced to the world that he's massively short the yen. Why do these guys do these things! Is it ego or naivety? Either way, it's not wise.

" early December, I went and took every penny of debt that I had – with the Mavericks, and personal debt, and everything – and converted it to a yen loan, when I think [the yen] was in the mid 80s [against the dollar]. So, I've been really happy with it."

I salute Mr. Cuban for making a great trade. But with that kind of leverage, he's very lucky it went his way. Overtrading is how blow-ups happen.

It's not the first time he's been a plunger, either. It seems like a large part of his play book.

And this is the first time I have borrowed in a foreign currency, but not my first big play. Right after the financial meltdown I went huge in Australian Debt. I told my wife if this went against me we were moving to Australia, but it worked.

One of these days, a maneating shark like Carl Icahn or George Soros will find where Cuban is swimming and will eat him, the same way Ackman is getting eaten.

Furthermore, if this is the sort of money that is riding the yen short, it's yet another warning to me that the BOJ may not be as successful as they might want to be, especially when the first line of the article let everyone know how easy it is.

One of the hottest trades in the world is shorting the yen.

It's never that easy.

No comments:

Post a Comment