Once again, gold is the big story. We’re seeing a fairly dramatic end-of-year liquidation, and it’s retraced so much that we’re almost entering bear market territory. I’m calling this the beginning of a bear trap: the trend followers are no longer getting long and are starting to get short—which in my mind is a buying [...]

As I write this, the March gold contract is trading around 1607, down more than 3% on the day. This downward pressure is coming from central bankers who need to raise money by the end of the year but can’t sell off their debt (bonds)—and all they have left that’s liquid is gold. I’m bullish [...]

Folks, I’ve received a number of emails in response to  my post last week about what to do if you have an MF Global account that’s been frozen. I wanted to take this opportunity to reiterate that I’m a former board member at the Chicago Mercantile Exchange and I know this world very well—if you [...]

Well folks, Jon Corzine, former New Jersey governor and head of MF Global, made what in our world is called a bad trade. He bought the PIIGS and sold France against it, essentially doing to Man what he did to the Garden State. Only this time, there is no Chris Christie to come to the [...]

Folks, the market looks like it might be in a bit of trouble today. I warned you earlier this week about end-of-month activity that would come into play—portfolio managers start playing with their positions and putting up window dressing to approve the appearance of their holdings. At the same time, Europe is still hanging on [...]

Folks, today is the first day of both the last week of the month and the last week of the 3rd quarter. In addition to the normal end-of-month activity, a great deal of OTC options and listed options activity comes due and goes off on Friday—it’s almost like a second expiration. The action and volatility [...]

Folks, today is quadruple expiration, the day where contracts for stock futures, index futures and options expire. I’ve been talking all week on the show about how, in addition to what’s happening in Europe, this expiration phenomenon also has an impact. So, why is it important? There are literally hundreds of billions of dollars sitting [...]

We’ve talked a lot about synthetic positions, how there is roughly a trillion dollars out there in derivative products—futures, options, etc.—that are being used by portfolio managers to replicate the performance of indices. These portfolio managers’ “alpha”—their trading skill—is judged by how they perform against whatever index is their benchmark. So, say the benchmark is [...]

Folks, since today is this last day of the trading month I want to talk about one of the important fundamentals that drives market activity on days like today: synthetic positions. A synthetic position is a way that portfolio managers and traders replicate a stock position by using financial instruments such as futures, options and [...]

Folks, earlier this week I talked about the loaded spring that is the 10-year treasury bond. I suggested that a lot of the money that came out of the commodities markets was being docked in what’s perceived as a safe harbor until it’s time to put it to work again. Well, it looks like that [...]