The concerns about Europe are not going away, and I get the sense that the authorities over there aren't willing to do something "big" without the cover of a major disaster. Whether its a Greek default or a major financial institution in trouble, the potential outcomes are equally unpleasant to this investor.
The market seemed as if it was hanging around to see if the Fed might pull a surprise rabbit out of the hat. When the news came out yesterday about Operation Twist, the selling picked up steam. But the buying into long-date Treasuries picked up with a vengeance. This morning, the yield on the 10-year Note has fallen to a record low of 1.77%.
Commodities are also down sharply today. Oil prices have fallen back to $81.25, while gold prices are now down near $1733. The gold etf (GLD) is sitting just below its 50-day average.
The VIX has spiked higher again this morning, up 8.5% right now to 40.50. Interestingly, if you look at the VIX chart, today's action so far looks like a 4th lower high.
Trading comment: During the recent market rally I had been writing that I didn't want to get sucked in, and that I was trimming equity exposure and adding to our index hedges. That makes me feel at least a little better on days like today, when my screen shows a sea of red. I still think we could see some buying surface as we near quarter-end, but I would continue to employ the same strategy. Any buys I may look at on the long side will have a short leash attached.
Disclosure: Jordan Kahn and/or KAM clients are long GLD, SH though positions can change at any time
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