Thursday, September 16, 2010

Markets consolidating, tight ranges, thinning volume

If you are trying to see the end, say the end times in stocks/markets. The hard part is trying to pinpoint the day/month/yr/timing. What is infuriating for doomers, or people that trade on doom it is a tease on a possible major sell. With HFT stabilizing stocks into range trading markets, the overall market indicators are showing trading ranges are narrowing, as bid/offers get tighter and tighter.

Central Banks are stabilizing bonds/FX/Sovereigns, which effects CDS markets, FX markets, bond markets and stocks, with 'academically clueless' CB bankers buying distressed crap in a frenetic crazy way. All markets are now trading sideways (range trade)

Stocks101: bid/offer tightens, volume building up a breakout on the upside is imminent.

Instead what we have is bid/offer tightening but volume dissipating which means a breakout on the downside is imminent

Dow/S&P500 note now range trade with shrinking volume:



One of the best risk 'barometer' currencies the Canadian dollar, now sitting in a range trade

If you are margin trading and holding puts, you would be in pain. Even if you have a tight call/put spread to make cash here you would need to have a leverage over 50% (1:50)

A major sell is there, even more major if the HFT's cuts longs to shorts in a 10min panic. Major sell being 400 to 500 + point drop on the dow.

When? An 'open ended imminent' say in a 3mth period.

Central bank intervention and stabilization is the equivalent of trying to hold back the ocean.

It's gonna break.

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