What to trade now - homework
Posted: Tue May 10, 2011 8:45 am
Sergei and I have been discussing some new trading possibilities over in my trading log. We'll move it here so the log stays a log and this is what it is.
It looks like the trade on oil was a little late -- you might have been able to catch it after hours yesterday. I believe I heard about the margin raise on oil futures a couple days back, in articles talking about the impact this had on silver over at Minyanville. But in this case, since oil had already taken a big hit, could be that the high margin guys had already gotten out, so the smaller rise in margin requirements didn't affect things as much. Meanwhile, some outfits that are very oil price sensitive (CCL, RCL) are still catching up to the drop -- we got a heads-up on them for free, once we realized that was how it works.
Someone at MV also noted that this margin business might be construed as an economic control tool by the fed, which started some really ugly comment streams about government trying to control things -- but it makes sense to some people that it would be a way to avoid excessive speculation fueled by QE money from all pouring into "things we need" and driving up their prices, vs "things we want" which have actually been going down a little.
Oil has some interesting other factors. Most of OPEC doesn't like Iran much, and above some price Iran really makes money. They are highly motivated to not have Iran make too much money, which they are pouring into their nuclear weapons efforts. Further, the Saudis have a real crack research team who looks at the ideal oil price to make them the most "real" money without crashing the world economy, or causing the money they get to devalue too much -- and they've said what that magic price is now and then. Oil, outside the blips, tends to track that number fairly well. Till recently that number was 70-80 a bbl, but they've since upped their target to about 100...funny thing, that's about what we see now.
Not all the fundamentals show up on balance sheets...Some is politics.
Out there in woulda-coulda-shoulda land, looks like I should have jumped on the $54 entry on BTE a couple days ago -- the profits there would be pretty sweet.
Looking at that in conjunction with my own psychology -- I was looking at it at the time, but thought there'd be a better, lower entry point, closer to 50. I've made that mistake a few times of late, which is why I do the woulda-coulda thing -- not to agonize over it, but to get it right next time. Of late, things don't seem to be dropping enough for long enough to get good re-entry points, or as good as one might expect based on somewhat older experiences.
It looks like the trade on oil was a little late -- you might have been able to catch it after hours yesterday. I believe I heard about the margin raise on oil futures a couple days back, in articles talking about the impact this had on silver over at Minyanville. But in this case, since oil had already taken a big hit, could be that the high margin guys had already gotten out, so the smaller rise in margin requirements didn't affect things as much. Meanwhile, some outfits that are very oil price sensitive (CCL, RCL) are still catching up to the drop -- we got a heads-up on them for free, once we realized that was how it works.
Someone at MV also noted that this margin business might be construed as an economic control tool by the fed, which started some really ugly comment streams about government trying to control things -- but it makes sense to some people that it would be a way to avoid excessive speculation fueled by QE money from all pouring into "things we need" and driving up their prices, vs "things we want" which have actually been going down a little.
Oil has some interesting other factors. Most of OPEC doesn't like Iran much, and above some price Iran really makes money. They are highly motivated to not have Iran make too much money, which they are pouring into their nuclear weapons efforts. Further, the Saudis have a real crack research team who looks at the ideal oil price to make them the most "real" money without crashing the world economy, or causing the money they get to devalue too much -- and they've said what that magic price is now and then. Oil, outside the blips, tends to track that number fairly well. Till recently that number was 70-80 a bbl, but they've since upped their target to about 100...funny thing, that's about what we see now.
Not all the fundamentals show up on balance sheets...Some is politics.
Out there in woulda-coulda-shoulda land, looks like I should have jumped on the $54 entry on BTE a couple days ago -- the profits there would be pretty sweet.
Looking at that in conjunction with my own psychology -- I was looking at it at the time, but thought there'd be a better, lower entry point, closer to 50. I've made that mistake a few times of late, which is why I do the woulda-coulda thing -- not to agonize over it, but to get it right next time. Of late, things don't seem to be dropping enough for long enough to get good re-entry points, or as good as one might expect based on somewhat older experiences.