Archive for February, 2009

One more Trading Day in the hands of our politicians

February 10, 2009 1 comment

Today the markets came back to terms with the severity of the problem we are facing, and the lack of tools the Government and the Fed has to stop the bleeding. We entered today’s announcements with optimism; the markets had traded higher for the last week. We were met with a reality check; banks with toxic assets have very few alternatives, if they sell assets at current prices the equity holders get hurt, if the government buys the assets are higher prices, the tax payers get hurt. So where is the happy balance? Maybe time will help, but we all want a quick fix, since we don’t want the history books showing that we too had a “lost” decade like the Japanese economy did recently.

The volatility in the markets increased once again due to the lack of certainty with the TARP money. What is the plan? For now, the market has no clue.

As intraday traders, the last few days had been better days to look for a direction to the flow. Today’s market activity leaves you right back to the higher volatility and uncertainty that many of use hoped was a thing of the past. We need to adjust once again our risk management skills to the realities of the market. Traders need to be much faster on the keys, we need to make faster decisions and above all not get stubborn.

Common sense is also critical in times of higher volatility. You never want to place yourself in a position where you are not in control of the trade.