Holiday Surprise

The S&P futures are down 12 points on news that Dubai World has defaulted on its debts, which are estimated to be $40 billion. European markets are down nearly 2%. The fear is that banks have exposure to the debt. In addition, Dubai World has assets across the globe that might need to be sold and could put pressure on asset markets.

Most thought that being long for Thanksgiving was a can't lose situation. Traders are not positioned for bad news and this could potentially get ugly as trading will be thin tomorrow. More likely the S&P will end up 12.

10 comments:

dukebravo said...

Yeah - isn't that just how it goes lately? There isn't seem to be any news that can break this market's spirit. I'm not sure what the catalyst for a correction might be. On a side note, I do think that the plunge in the dollar was a necessary prerequisite to a recovery there, so perhaps that will shake out and begin heading up.

Tsachy Mishal said...

Europe closed down 3% and S&P futures are now down 22. The financial system is so intertwined that its hard to know what the knock on effects of an event will be. Sometimes nothing happens and other times there is a domino effect.

Tsachy Mishal said...

Few are prepared for a domino effect. Not saying it will happen, just saying.

Anonymous said...

This is AWESOME. I wonder who is gonna bail them out?

Tsachy Mishal said...

This is great news for the market. More bailouts, more money printing.

Anonymous said...

Down 25 points now.

nicasurfer said...

Loaded up on some spy puts on wednesday. They are gonna be super green this morning.

Was wondering how you calculate your exit or profit.

Tsachy Mishal said...

I would at least sell a portion, but that's just my style of trading.

Anonymous said...

Hi Tsachy,
Can you explain what you mean by most traders are not 'positioned' for a down market? And then you believed the market would end higher. Not quite ending higher but it did hit its' low point at the open and then climbed higher rest of day. My question -- is this manipulation so that the smart money can bail out next week? Thanks for response.

Tsachy Mishal said...

According to fund manager surveys, sentiment surveys, short interest figures and options indicators investors are positioned in a pretty aggressive manner. That is what I meant by most are not "positioned" for a down market.

I was joking about the market ending up 12, as recently no matter how bad the news has been the market only goes up.

I believe that risk is high as the economy is not healthy, stocks are not cheap and investors are complacent. This is not a backdrop for above average long term returns.

The short run is always tougher. After Fridays fall the short run is tough. I will try to give more light Monday morning as I want to think this through.