Thursday, March 30, 2006

Trivial Yet Baffling

I'd hate to use the word "predictable" but the market was pretty much that - predictable. Huge rally, followed by a 10 am reversal breaking through the day's lows and leading into a flatline. A bull case may be made of that. Generic.

So, what's interesting about this market?

Well, Gold, Oil, Interest Rates and Equities are all in rally mode. I am probably not old enough to say that this is weird and unusual, but you know what? It's unusual. Our fund is delta long all of these things in one form or another and while we have many technical reasons to be long (we don't question prices, we trade them), there's still that persistent and somewhat apprehensive "Why?" inside of me. The persistent part of it seems to be telling me that "something wicked this way [still] comes" and the apprehensive one prevents me from going on a shopping spree (no matter how bullish I am I have a healthy respect for risk).

I am no economist (do they actually know how to make money anyway?) and thus don't have the ability to concoct a believable (but not necessarily correct) answer. Nonetheless, it is still baffling that a few inversely correlated (so history says) markets are all heading in the same direction. I read this as a sign of increased volatility approaching, and likely not in the most positive way. With VIX trading at its ever-low levels of pre-teens owning some is a good idea.

Damn those bulls, even when I run amongst them.

Cheers,
/Dmitry

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