Wednesday, October 17, 2012

Just to be clear - get long VOL

Today is an example of a slow-motion long liquidation.  The ZN liquidity providers of the liquidity providers (the 2nd set of buyers from this morning) are throwing in the towel as stocks return to their noon levels.   The question to answer now is...will the sellers from above take profits...or will there be a new set of large buyers when ZN trades below 132-00.  If not for both, then this mornings sellers will create an oversupply condition, and the market will stay down for at least another day.  Otherwise, the whole move from today could reverse.  Its a pretty wild range of options, so i'd want to be long rate VOL here.

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