- Narrowly missed selling GCM0 last night. Limit sell order at 1193. High traded 1192.8! Frustrating (now 1168).
- Markets in risk aversion mode. Plenty to worry about : Greece/EU contagion, GS witch-hunt, Australia Henry Tax, China tightening, US financial bill to limit future bailouts, UK elections tomorrow.
- Price action last night reflects panic exit from risk trades eg S&P -2.4%, Copper -3.5%, EUR/JPY -1.5%, USDX +1.4%, US10YY -9 bp.
- What is puzzling me is price action in Gold. Recently, it has been EUR down = Gold up, but last night was more like back to the old USD up = Gold down. This change is causing some damage to my P&L. Suspect this is due to raising of cash for margin calls.
- As might be expected, hurt by USD/CAD and Bunds move, made up for by short EUR vs USD+GBP and short S&P.
- The other major positions in ED Spread and USD/JPY little changed (on the day). Sugar is doing OK but tiny position.
- So problem child = Gold. Dropped P&L last night can be wholly attributed to its unexpected behavior.
- Gold Charts : Still looking positive. Some signs of cracks on daily. Watching with care.
- Do not agree with wholesale blind liquidation of Risk trades by markets. Think that when the dust settles, AUD (and CAD if I weren't so long already) would be a good long term buys.
- The other interesting observation : This EUR/JPY downmove purely driven by EUR/USD component ie constant USD/JPY. Seem to suggest selling JPY is good trade because if JPY cannot rally in face of risk aversion, then surely it must weaken when risk taking comes back.
05 May 2010
Gold : Problem Child & Other Thoughts
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Took some profits on short EUR/USD and S&P this morning at 1.2952 and 1170.
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