Getting Hammered

And not in a good way, I may add. I just checked the event log for the remainder of this week and it looks rather petrifying: Starting tomorrow one market moving event after the other, and given the current frailty in equities the potential for continued hilarity can not be ignored. FYI – I didn’t include the core consumption expenditures report today as that one will already be priced in by the time you read this.

Tomorrow FOMC announcement at 2:00pm clearly is an opportunity to turn of your monitor, go outside and attend to something more productive. Like watching paint dry…. at 110 degrees Fahrenheit I may add, so it shouldn’t take very long.

If it’s any consolation, we over here in Europe aren’t spared either as Spain as well as several other countries are expecting a heat wave starting tomorrow, pushing mid day temperatures into the mid 40s. In Celsius of course, which is about 110 Fahrenheit and thus comparable what you poor bastards in the U.S. have been going through lately. Which frankly has me hoping that both our electric grid and my hard working A/C unit are going to hold up.

Let’s talk bizns – the E-Mini campaign is down but not yet out. It’s not looking hot of course given a) it really should have taken off yesterday and b) well, see above – event risk is going to introduce a lot more uncertainty here.

You may be surprised to learn however that UVOL actually outpaced DVOL yesterday, so one (i.e. yours truly) wonders if this wasn’t a little trap to draw in a few more hobby bears.

As you can see the peak at 2849.5 occurred as the rally started to run out of oxygen. It’s not unusual and given the current nature of the advance does not necessary spell its demise. HOWEVER, that said – the bulls have fought tooth and nails to recapture the all time high near 2846.5 (current adj. futures price) and at some point we simply have to get out of the gate here.

On the IV front I’m getting a bit cautious. The IVTS – the Implied Volatility Term Structure (VIX/VXV) is starting to run higher again we ought to be okay until 22 or 23. If it exceeds that we may another IV expansion phase.

The crude campaign is looking good. I’ve kept my trail at break/even and will forget about it until it’s time to advance it or it’s stopped out.

The USD/JPY is also looking positive but since the EUR/USD is punching higher and again there is a ton of event risk looming ahead I’m tightening my stop a bit to -0.5R.

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I’ve kept my silver update below the fold as price has gyrated around yesterday and currently is back at our original entry mark. So if you snoozed yesterday then you may consider taking it today. It’s not a high probability campaign however and if you play along make sure to keep exposure < 0.5%. [/am4show]