Tuesday, July 26, 2011

Trading Around the Debt Annoucements

Markets were holding up decently after a rough start yesterday, with the sp500 futures dropping 12 points in Asia trade - I faded this move at 1332, but was unable to offload it at the day open price which is almost hit at 1344. I closed the trade as a scratch.

The AUD trade yesterday was much better timed, as I had planned the trade to go long at 1.08, and the price touched this level, which I was able to offload half at 1.085, then repick up some positions today on the 1.88 breakout. The AUD long trade seems to be a no brainer at this point - USD sovereign issues, carry interest, commodities/inflation themes, risk/peripheral economy trade. The question is rather how much leverage do you want on the trade.

All the equity markets are likely to rally as there seems to be no real negative news despite the US uncertainty. Tech is still holding up well.

I added GBG to my portfolio at 81c as it hovers near the lows of the year, but has recently spiked on high volume, which is likely to see some short term bounce towards the 1.00 level.

I'm trying to get overweight commodity producers and add a Oil producer to my portfolio as the themes from debt issues shift back to the ever present inflationary concerns in the coming weeks. I'll be looking to add some WPL on any weakness.

Japan's case of ratings downgrade - not a huge deal