Contracting volatility - finding trading harder recently ?

[DaxTrader]

Interesting analysis

 

[china white]

Daxie,

smashed front-end volatilities r a precursor to intermediate-term sell-offs. In the present set-up, we'll definitely get a correction after tomorrow's expiry, the question is what's gonna happen to those front-end vols? if they rise quickly (loads of fear at the first sell-off), then we'll have another leg up b4 selling-off big time. If the volatilities stay low (complacency), then down, down, down straight away.....

 

[DaxTrader]

interesting to see what happens

haven't been able to log onto the board, won't allow me to log in - says I have a virus which I've checked for and don't have....

Apparently Bullish Bear has the same problem.

Hope to be back when it allows me

 

[Helenqu]

I've certainly noticed it on the ESTX too. Good to know it's not just me feeling the effects

 

[frugi]

Forgive my ignorance china but what will expire tomorrow? I've checked the option calendar and there doesn't seem to be anything, in the US at least.

I totally agree about the lack of volatility - the VIX and Vixen are all perilously close to a big leg up - it's surely only a matter of a few days at most. Investors Intelligence bullish sentiment is dangerously high as well, so I've bought some June FTSE covered warrant puts today as insurance. Mmmm 16x gearing!

Also check out the Dow Transports, they've broken the uptrend drawn from the March lows after considerable momentum divergences and savagely decreased volume at the recent high. They were the first to start the rally and will probalby be the first to end it.

I don't like the lower volume of money flow on new INDU highs either. The reverse pattern occurred on the March lows, which preceded the rally. This looks like an advance warning of a correction, especially given the bearish rising wedge.

And what on earth happened to bond prices yesterday, exploding to unprecedented highs? Either bond trades or equity traders are wrong, and I suspect it's the latter...

 

[DaxTrader]

Have a look at

http://de.finance.yahoo.com/q?s=^VDAX&d=c&t=2y&l=on&z=b&q=l

volatility for Dax - similar to estox probably, estox is about 1/3 dax constituents

 

[TZ1]

I have been looking at the ranges in the dax and the E-stoxx....
there is definately nothing excited.....it hasnt been easy trading..
where r the days where the dax use to give trades of 150/200 pts....

tz1

 

[DaxTrader]

maybe an obvious thing to point out

but a 2% move when for example the Dax was 5000 beginning of last year is 100 points , recently with the Dax down to 2300 area it was only 46 points........

Lot of people trade the Dow thinking "it's easier, more points"

2 % move in the Dow is 175 points

When the Dax was at it's peak at 8000 ...... 160 points 2 %

Need to think in terms of postion size :

ie £10 a point in the dow at 8900 is £89k
equiv in eurostox at 2300 is £39 per point = £89k
dax is £30 a point at 3000 = £89k

 

[rglenn]

Hi Dax Trader

I have been trading the dax myself for the past few months because I thought I would make more money because of its volatility. But I was obviously wrong.

When all the other markets move into favourable positions the dax has always been dragging its heels.

for example this morning the ftse has gone over 4000 the dax is still under 2900.

If it was trending like the other markets it should be over 2900 by now.

 

[DaxTrader]

Hi

indexes tend to move broadly in line but not allways exactly the same.

Eg. at the March lows:

FTSE 3275 area, recently 4060 area = 24% rally

Dax 2190, recently 3070 = 40% rally

in the rally up, the Dax outperformed hugely, now maybe it is catch up time for the FTSE.

Eurostox 50 has had a 31% rally from march lows, so since Dax is roughly 1/3 of Eurostox index constituents, the CAC and others must have underperformed in that time.

Long term, FTSE's 52% max fall small comp to Dax's 73% :-((