The Eye of Sauros @ The Lord of Trading

and excellent post to but what real banking is int...

2009-12-02T02:19:38.023Z

and excellent post to but what real banking is into perspective!

Your point about different categories of rich tota...

2009-12-02T02:19:16.449Z

Your point about different categories of rich totally applies to wall street. no one gave Paulson recognition even with a billion bux under his belt. But, now he is legendary on par with Sauros and the likes with a few more billion or so.

Best Trading WebsiteTrading

will gold come down??or will gold goes up till 130...

2009-11-25T20:01:37.936Z

will gold come down??or will gold goes up till 1300??

Love the style of your writing, definitely takes a...

2009-11-19T19:05:23.034Z

Love the style of your writing, definitely takes a moment to read but definitely worth it. Hmm seems stylistic of the french non ;-) ? Your plays on real estate sounds interesting. At the momement it seems that everyone on the blogsphere are bearish. Id say once everyone starts going bullish would be the right time to go bearish. Just got to wait for that turn... I also was dead wrong about the length of the crisis and who knows CRE definitely can be an additional mini-crises... Look forward for your next post.

-snapman

Make it rain! It's the thing

2009-11-18T23:20:33.231Z

Make it rain! It's the thing

Keep swingin in the rain and eventually you will m...

2009-11-17T14:31:07.198Z

Keep swingin in the rain and eventually you will make it rain! haha...

I really enjoyed your explaination between the Eur and GBP markets and the reason why you trade them. Though toward the end the material got a big heavy to follow. Though overal another A+ blog.

-snapman

Hey Alex, thanks for your comments. I think too ma...

2009-11-12T22:39:43.109Z

Hey Alex, thanks for your comments.
I think too many guys missed the rally for the correction to e sustained. I may buy more on the dip. To answer your question, the chart comes from OANDA, I purchased my "synthetic" gold with them and I use them for Forex.

Oh one more thing, Congrats to Goldum! I respect t...

2009-11-12T17:14:57.384Z

Oh one more thing, Congrats to Goldum! I respect the entrepreneurial spirit especially in a tough area such as pension funds. They have been withering away since the crisis!

And Sauros, where did you get that chart? Is that on your platform?

LOL what an excellent post: I love the part about ...

2009-11-12T17:12:41.360Z

LOL what an excellent post: I love the part about "Metal Trader" ... seriously though this gold situations is getting way wild!

You are getting signficant test on resistences on equities...

But hey who knows maybe it will only be a temp correction before equities continute rally with continued weak dollar...

all the correct fundamentals are in place for that...

Lets hope people can keep faith in the Feds; though they do seem to be loosing credibility

I really like this post, espcially the underying p...

2009-11-01T23:12:04.396Z

I really like this post, espcially the underying philisophical aspects as to why you trade the way you do.

First, to me derivatives are definitely what will ...

2009-10-26T22:10:02.125Z

First, to me derivatives are definitely what will lead us to the financial armageddon and the actual bubble that has not burst yet, cf this post where i discuss this: http://blog.thelordoftrading.com/2009/06/dealing-with-16-digit-dollar-exposure.html

The Bubble is created and fed by the OTC derivatives dealers and makers: mostly the US banks. That's similar to what happened with Credit Derivatives and CDOs: that's a volume business, the more you sell, the more you make money, so you sell what you don't have and what doesn't exist: that's pure leverage. Here the story shows that JP and DB sold gold no one has and this kind of methods works when all the participants play the "game". But China, the main player in several metals and commodities markets, announced in August that they wouldn't play anymore that and may default on their OTC agreements. A default on their losses would be the direct loss of their OTC counterparts : mostly the US banks

It looks like China is to create artificially a drought of the gold, silver and the commodities markets : roughly they are to massively exchange USD (they have plenty of them, purchased to maintain their currency weak) against the physical commodities. The implications would be obvious : Gold, silver and commodities will skyrocket while the USD will sank and become worthless.
Doing so:
- they will get rid of their USD as it seems the USD is doomed and its weakness is supported by the US gov itself (notably to inflate its debt out)
- they will be the main owner of commodities (they are already the main producer of most of them)
- they will get rid of the derivatives exposure and will avoid the financial armageddon when it comes letting it for the West...

I've seen less smart moves...

"and this kind of situation shows why derivat...

2009-10-26T16:03:16.348Z

"and this kind of situation shows why derivatives are weapons of financial destruction," ... haha nice quote. So you are saying the deriviatives markets is the next bubble. And you site possible demand bubbles coming from emerging asia? And you think that supply will not be able to meet depend and thus gold will be in the 2000＋ range. ... so what are the implications for the USD and equties?

I definitely expect short term dollar strength the...

2009-09-12T22:21:07.758+01:00

I definitely expect short term dollar strength the dollar move however is the most extended on the EUR of the major pairs. That's just due to regional differences. The inflows of equities has increased, lots of this is probably related to Central Banking/Monetary Policies

I think I finally understand your arugement about ...

2009-08-06T18:04:55.264+01:00

I think I finally understand your arugement about QE and inflation. Just took some time to work out. Im finishing up the edited version. Ill forward it to you when Im done and follow up with some comments!

Thanks for this nice post Alex aka Snapman. You ra...

2009-07-20T22:56:47.393+01:00

Thanks for this nice post Alex aka Snapman. You raise here a very interesting point and I brought the discussion to the forum : http://forum.thelordoftrading.com/the-bull-the-bear-and-the-ugly-spreader-trading-forum-f1/diversification-t80.htm#172

Thanks Snapman the White for this very complete Te...

2009-07-08T00:18:34.867+01:00

Thanks Snapman the White for this very complete Technical Analysis. Actually as I've been monitoring very closely the stock indices lately I opened a thread in the forum to discuss this post : http://forum.thelordoftrading.com/the-bull-the-bear-and-the-ugly-spreader-trading-forum-f1/stock-indices-the-finger-on-the-short-trigger-t49.htm

See you there! Sauros

Nice first post in the Eye of Sauros, Snapman the ...

2009-07-01T23:26:51.267+01:00

Nice first post in the Eye of Sauros, Snapman the white! It looks like we now have an Economist with us at the Lord of Trading... finally!
As you mentioned, if we are currently in a secular cycle, the impact of the chart is quite profound, and I'm afraid we are and my personal opinion is we have not hit the bottom yet.
A rough computation gives an average recovery time of 300 months, that's a "mere" 25 years... The thing is not to miss that train.

Nice post Sauros, you certainly bring up a good po...

2009-06-29T14:23:37.863+01:00

Nice post Sauros, you certainly bring up a good point of the overkill of quants in the market. I also tend to agree with Willmot though, we probably won't be able to escape full quant educations as its so pervasive in all fields of social academia. Though, such structure always has holes that can be exploited for the little guys. I know quite a few traders who rely on such mass self fulfilling prophecies, for their contrian trades to work (Of course there are a plethora of diff styles as well).

However, I guess if we are talking about prevention of systemic damage and ensuring welfare and standards of living, then we do indeed need to rethink "the type of education that those 23 year olds, soon to be in charge of your pension, are getting."

Though, the point is, from a trader's perspective, one can always adapt to "what is" and still make profits in whatever regime or powers that be. Of course always easier said then done...

Hi Alex, so you're back in the US! I hope you ...

2009-06-17T23:00:16.156+01:00

Hi Alex, so you're back in the US! I hope you had a nice trip. I will send you a couple of reports, including this one on the S&P500, it might be of interest for you. See you

Interesting contraian idea, lets see how it plays ...

2009-06-17T15:00:57.163+01:00

Interesting contraian idea, lets see how it plays out!

Welcome to the Fellowship, my Old Friend. I'm happ...

2009-05-20T00:29:18.802+01:00

Welcome to the Fellowship, my Old Friend. I'm happy we'll collaborate again. Hope to see you soon in London!

2 Alex Thanks Alex for your comment, To answer you...

2009-04-16T13:17:00.000+01:00

2 Alex
Thanks Alex for your comment,
To answer your question, my definitions of short, medium and long term are a bit flexible depending on the market conditions but roughly short term is from one to a few weeks, medium a few months and long one to a few years. I tend to consider the intraday as a "noise" particularly with the current market high volatility (I use as a measure of the volatility the 14-day ATR ) due to the lack of participants. I'm not able to trade that noise and make consistently money scalping as there's no rational (it's more accurate to say I didn't find one) and my analysis (notably the economic datas as you mentionned) merely don't work.
One word on the MtM regulation, I would compare it with the pain in the Human body. The pain signals when there's something wrong in the body. If you take out the pain, you will feel immediately better but nothing signals to your brain that something is wrong in your body and you can easily live without caring about it. Until it gets worst and you can't recover. If you take out the fair value, the financial system will immediately look like it recovers until it collapses.
Now my problem is to know WHEN it will collapse and if it does it early enough for my short positions to stay alive. It's likely that they will be hurt the next few days (as I'm writing those lines, it is rumoured that GS will smash their earnings, showing their second best results ever) but the thing is I don't want to miss the big swing down.
Now my personal guess regarding the timing (a very difficult exercice indeed!). In a few words, I believe, and this for a few months now, that the US have no choice but to find a way to nationalize their banks. The DIP (debtor in possession) process allows this in the framework of a supported bankruptcy, ie put the priority on the taxpayer while letting the company keep running its business. My guess is the US Government will DIP Chrysler first at the end of its 30-day last chance period to test the market reaction before considering it with GM. While those companies banruptcy are already priced for a while, I think the reaction will be very negative and it could trigger a major downtrend particularly for the banks as speculation that the gov will DIP the banks as well will grow. I need to detail more all this in a post but in a few words : "Sell the DIP" ;-)
Finally, back to the banks, I really recommend the reading of Mike Mayo's report I referred to in my previous post "the Guru effect", I find it really excellent.
cheers

[Comment by Alexander Le, transferred from my form...

2009-04-16T13:16:00.000+01:00

[Comment by Alexander Le, transferred from my former blog]
Nice Post Sauros,

You bring up a nice point about the financial sector, things in the short term (next few weeks) i'd say are looking a bit more rosy, but this is id say people ignoring actual fundamentals of the economy (look at the recent housing and job market reports). And I'm sure earnings are better for banks, but I would say one would have to look carefully over their balance sheets and income statement to see where these better earnings are coming from (the gov't maybe?). I wouldn't say these earnings are due to actually loaning or organic business generation. So maybe this rally does have more steam IF this is not already priced in.

All in all, I would love to hear more thoughts on this from you.

PS. (could you define time frames for short term and medium term)

-Alex