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It was definitely Risk ON as the markets rallied on news that Italy PM Berlusconi will resign after the austerity vote.
Why this is a rationale to take on more risk eludes me, and I tended to view today as what we call 'technical trade.'
The VIX did fall, but is still within a range.
The metals ripped higher, with gold tearing through key resistance at 1780 and running up to 1800 into the close.
Now that the bulls have stuck a close here, they need to hold it and post a weekly close in the 1780+ area.
If they can do this then the next big trial will come with the December option expirations, barring fresh headline jitters.
As noted on the chart, the last big smackdown was an exceptional buying opportunity. For those 'waiting on the sidelines' if you did not take that low price, then you should stop kidding yourselves. You are out of the metals market, and have joined the ranks of bystanders.
That is not to say that the road for the metals going forward is smooth and straight up. It most certainly will not. Big changes are coming, and the outcomes are difficult to handicap to say the least.
But all things considered, I would rather be prepared for what is probably coming and hope for something better, than to place all our hopes solely in the hands of politicians who so far have shown themselves to be dishonorable, duplicitous, and even cruel.
For all that is going on the complacency amongst the pros is remarkable. There are wild swings in the futures overnight, the markets come in lower each morning during the retail trade, and the wiseguys buy the dip.
No fear. But I wonder how much conviction there is as well.
ZeroHedge initially misinterpreted the somewhat vague release from CME, raising an alarm amongst a number of people who sent it to me. And a number of people have since been critical of their mistake, which from what I could see was understandable. The CME release was very misleading.
ZH has since corrected it. And the ICE release makes the exchanges' intentions abundantly clear. When you are on the 'cutting edge' of releasing and interpreting news, it is possible to get it wrong once in a while. And it is to your credit to correct it as soon as you can, which has been done.
Zerohedge performs a valuable service in making headlines and news available to general readership in a timely manner, and I thank them for this. Sometimes the headlines are a bit sensational but that is what it is. But on net I am exceptionally glad that the site exists.
The exchange actions on margin may tend to quell some of the expected volatility from MF Global, which is good news to those who have accounts there which they are still trying to resolve.
But greater events are in motion, and it may end up having little lasting effect once the herd starts to move.
Exchange Actions Re: MF Global Inc.
Effective immediately, ICE Futures U.S. is temporarily
lowering the Initial Margin rate for all Speculative accounts to a
level equal to the Maintenance Margin rate for all contracts. The
Initial Margin rate for hedgers already is the same as the
Maintenance Margin rate.
This action is being taken to mute the impact of the transfer of
accounts from MF Global Inc. to other clearing members that
was effected overnight, and thereby support the integrity of
Exchange markets.
