Wednesday, June 13, 2007
Up or Down?
The Bears took off from where they left last week and took back their control of the stock market, sending the major market indices down sharply. The Dow fell 129.95 points to close at 13,295.01. The SPX lost 16.12 points to finish on 1,493.00.
On Monday night I sent out an email explaining that over the next three days we are probably going to see a lot of movement because of economic data and that it was best not to be caught up in this storm when our play was already profitable.
We therefore closed the put side of the play for 45c yesterday (we sold it for 75c). We still have the calls on but we are comfortably in the green with only two days to go.
What was the reason for the decline....simple....interest rates.
The 10 year US bond hit a high of 5.27% and closed at 5.24 percent. This is the highest level for this bond’s yield since May 2002. This news was helped by reports out of China that inflation rose at its fastest pace in more than two years. There is now big international pressure on China to raise its interest rates.
Thursday and Friday see key inflation readings. Lets see what happens to the markets after these reports are out.
Until next time.
On Monday night I sent out an email explaining that over the next three days we are probably going to see a lot of movement because of economic data and that it was best not to be caught up in this storm when our play was already profitable.
We therefore closed the put side of the play for 45c yesterday (we sold it for 75c). We still have the calls on but we are comfortably in the green with only two days to go.
What was the reason for the decline....simple....interest rates.
The 10 year US bond hit a high of 5.27% and closed at 5.24 percent. This is the highest level for this bond’s yield since May 2002. This news was helped by reports out of China that inflation rose at its fastest pace in more than two years. There is now big international pressure on China to raise its interest rates.
Thursday and Friday see key inflation readings. Lets see what happens to the markets after these reports are out.
Until next time.
# posted by Paul @ 3:37 AM 
