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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: saveslivesbyday who wrote (76802)	9/8/2007 11:04:25 AM
From: Real Man	Respond to of 94695

Exactly, record complacency (blind faith in Fed put) is the problem which gets to a new record and a bigger problem with every Fed's liquidity injection bailout. Volativity is on the rise now. As the market comes down, volativity increases, and so does the need to delta-hedge. At some point the negative feedback effect kicks in due to all the program trading delta- related selling, and down we go in 1987 fashion, unless the Fed injects more, which they always do -ggg-. Some day it won't be enough, but the main derivative part is rate and currency swaps, not stocks. So, Yen is a good indicator of troubles -g- The same story, a lot more capital is tied up in currency and rate swaps, a lot more losses will come if these trades come unglued. Stocks are just not important anymore, this market is upside down, with derivatives leading the way and dominating all the trading. Some say PPT acts by buying futures. If so, PPT sold in July -g- Guess what? If the Fed cuts, the same $400 Trillion derivative monster that has been supporting the dollar for so long will sell it now. There could be few buyers (of the dollar) -g- So, I would not count on the cut as being a 100% positive thing at the moment. There is a reason why the Fed is jawboning instead of acting. The reason is they are trapped in between supporting the economy (cut) and pleasing foreign dollar holders (not cut, maybe raise)