Wednesday, January 20, 2010

Still consolidating... (NASDAQ)


Clearly volume has picked up as we have traded in the recent narrow range following the rising wedge breakout. I suspect the big boys can suck in a lot of buyers (short covering and buy stops) on a breakout of this range, so why wouldn't they? Lets see, but I still think this situation will resolve its self with a failed breakout (capitulation) before we begin any kind of real correction.

Disclosure: I have option positions on QQQQ.

1 comment:

chintan shah said...

http://en.wikipedia.org/wiki/John_D._Arnold

http://commoditytradealert.com/blog/?p=2029

I was really fascinated by this man .He racked in 200%++ returns every yr trading natural gas and turned his 8 million $ into 1.5 $billion in just 6 yrs from 2002 to 2008.

After doing research my conclusion about his strategy is here:

Arnold was a trader of natural gas in Enron which is now bankrupt.He was paid 8 m$ bonus on 750m$ profits which is very low compared to industry standards(10-20%) as this profit was not by speculation but from market making.


So when enron got bankrupt he started market making for other energy firms who used to go to enron for hedging etc..

so basically he may provide bid/ask quote for forwad month futures contracts for various firms who want to hedge their exposure to price fluctuations
and once he takes position he will quickly get out of the position and will eat bid/ask spread every time.
(these things happen OTC as NG front month futures volume on NYMEX is mere 70-100k per day. and other forward months are totally illiquid)

Basically he benefited from enron's collapse.


Whats your opinion?