Although there were some efforts to push down price in the thin hours, the debt ceiling showdown has a bid under the metals, so most of the action was in capping the price to keep it manageable. So what next, declare victory and go home?
When Comex options expire, the holder receives an active long or short position in the contract the next day. And so we will have quite a few new futures contracts issued tomorrow given the number of 'in the money' calls.
The buyer of an option on a future contract is taking limited risk. Conversion to the actual futures contract itself, however, leaves the owner with substantial downside risk, so that holder often places a 'stop loss order'.
The Street crawlers can see those stops and their clustering and will often test that number and give the newbies a 'gut check' to see how serious they are.
But against that is the debt ceiling drama, so it might be quite quick unless there is some news being spread, even if it is only behind the scenes. There is quite a bit of that leakage going on in Washington these days.
The Dollar took a bit of a dive today, but is still above the critical support levels.
The actual mechanics of the debt ceiling timing are a bit more complex than many believe. Technically the Treasury can muddle along until August 15 I think given the need for new funding issuance, although the Credit Rating cartel has the power to rattle their pens and frighten everyone. But these things tend to involve anti-climactic moments and a dragging on. So timing is tough.
Certainly a deal or delay will be sought for Sunday evening before the Asian open. It is going to be a tough trade to decide how to go into the weekend.
