The stampede

Panic Abounds
1) USDJPY falls from 106 levels to 104 levels
2) VIX climbs to 29 from 26-27 and
3) S&P 500 is poised to break 1200 to the downside just before the financial report their earnings.
Should be interesting to see what happens now since this seems to be a market moving down with no news just expectations of bad things to come. If expectations continue to change like this, we may even have a positive bounce when earnings are actually released
So far anyone who had gotten short financials based on my recommendations Friday, is probably doing well. ...

USDZAR: I was asked my views on the South African Rand. Here is what I know

a) The spot trader on my desk used to hate trading the rand :)... it has jumps. For instance notice the rand vol is 20% in chart 2 while most currency vols are 10-15%.
b) It used to follow the EURUSD and is now diverged a bit as you can see in chart 1. this may seem like an opportunity to get long ZAR, esp. with the gold production
c) I think some cheap punt like a 1m Reverse Knock Out on top of a short USDZAR position may work.
d) For this trade (short USDZAR) I would set my stops quite conservatively like around 8.25 or something around those levels. If it hits that get out of the trade....and make sure you have an automated stop since with a jump it may get to much worse levels before you can stop
















chart1 red line = USDEUR and blue line = ZARUSD

chart 2 blue line = USDZAR annualized volatility












SORRY ABOUT THE CRAPPY PICTURES. I WILL FIGURE OUT HOW TO DO THEM BETTER NEXT TIME.... BUT YOU CAN CLICK ON THEM TO GET BETTER RESOLUTION