Equties Sell Off, but will it last?

We have had a slight sell off today in US Equities in particular, as the constant upwards grind is way over stretched. Now for the past 3 years pretty much, the losses on a day like this are usually made up within a day or two such is the appetite for Equities, but you never know if this time will be different. We haven't had more then a 4% pullback in over a year so if anything happens around those levels then it would be a good buy, using history as a guide.
The main risk event in the UK has come and gone with Scotland voting no to independence. Volatility has dropped significantly in FTSE related Options, and Short Sterling has now pushed back up again pricing in a rate hike sooner rather then later.
I think its interesting times ahead, with data playing a more vital role then before for both the BoE and the FED, so keeping tabs on this.
As far as positions go, I haven't been too active, but I have gone long Corn, as the Ag space continues to get smacked. I have also used the small sell off today to sell some premium in some Indices, but on a small scale. Not much movement in the STIRs so not much to report there, but we have more data coming up for the rest of the week so hopefully we have some movement of that.

My thoughts on Apple and the Iphone 6

Much has been said about the new phone and the response on the surface seems exactly how you would expect it to be. Regardless of what Apple really released the euphoria would have been immense, consumers were lining up to buy the phone for months, and so despite the fact that's its been slow to catch up with the competition in regards to screen size and other features, it was always going to be a massive seller.
The cult like following of Apple and its products is the dream position of any company. The fact they can release products of similar specs to the competition yet still command such a big premium in price, and have people queue up and have savings ready to buy these overpriced phones is the promise land. Demand is very inelastic with Apple, so regardless of the price demand will be huge. They could have charged over £1000 for the phone and it would still crash websites and cause mass euphoria.
While Apple have this ability to charge premium for their products, and the fact they don't need to discount at all, can only mean its great to be a shareholder. It is likely that their cash pile is going to grow massively and sales beat records as the higher priced phones will obviously add to the top and bottom line.
So whilst I would not buy an Iphone since I don't think its a good deal at all, and much better value and innovation is found in Androids and to some expect Windows phones,(in my opinion) I would however go long their stock, since the model of massively loyal customers coupled with very premium prices is likely to support the stock price going forward into the Christmas season.
Because of this I am looking for bullish strategies on any pullback. Rather then buying the shares I prefer to sell premium, combined with long call positions.

Going long the Oct 102.14/112.14 Call Spread, and financing that a bit by selling a 97.14/92.14 Put Spread would cost roughly $1.60, which is 160$ per contract  for a max profit of 840 dollars, but loss will be limited to 160 dollars if it doesn't fall below 95.64 at expiry. I prefer playing  this way as its better margin wise as you can control more shares with much less investment and, also always protect yourself to the downside since nothing is guaranteed. However with the market the way it is, low rates, and the hunger for Yield, for the time being, being long is the best way to go.

Bonds Selling off as Dollar Strengthens

As Equities remain elevated, Bonds have taken the cue to sell off, as expectations of rate movements from the FED and BoE weigh.
Euro Bonds upside has been capped as it seems as though the ECB has used most of its bullets, with rate cuts and the announcement of QE in last Thursdays rate meeting.
I have generally tried to go long as much as I can in the Euribor Spreads as the floor for now has been set, and I went long into the initial fall in Spreads during the press conference to then realize profit as the floor seemed to be reached and the curve started to steepen slightly.
The following day we had weaker NFP as well, with the instant reaction in Equities going up, and Bonds going up also. This reaction proves the fact that the market doesn't care about fundamentals, its trading on the basis of cheaper money for longer, and this is the main driving force behind the one way move that we observe day after day.
Despite this worse number, the dollar has reached multi month highs, as expectations for FED tightening takes hold.
The market has been tough to trade as the trends have been strong, and despite, oversold conditions in some USD fx pairs, there doesn't seem to be any stabilization as of now.However I'm using options to play direction so as to not be whipsawed out but the frequent spikes that have been occurring.
Currently I'm long Corn, with a put bought as protection, and I'm short ES via a Call Spread financed by a out of the money put. A slight correction would be nice!
Looking forward we have US Retail Sales due, which could provide a bit of volatility,

30 Yr Strategy Update

Its been a quiet period since the end of August with two trades being triggered, one for a loss and one for a profit. Overall profit has been 2 ticks.

Holidays Over as Volume Should Return

Last week saw more upside in Equities and Bonds on the back of very low volume. No real sellers anywhere, just short covering and thin markets helping push the markets up.
August was a very difficult month personally, I managed to make some money but am hoping for better volume and more two sided action come September.
Looking forward we have a lot of data this week, as is the case on the first week of the month. This will determine if its low rates for ever of a change in rhetoric.
Thursday is an important ECB meeting with a high probability chance of a potential rate cut and QE. This would be using up all the chips for the ECB in my opinion, which won't change the decline in Europe. If this is the case we are likely to see Euribor Yields go very close to zero if not negative, and the Yield Curve become flat, if not head to inversion. Never thought I would be saying that from such a low base.

30 Yr Strategy update: No filled trades last week

Same Theme Continues

Stock Markets had a record week as ES hit new highs and the Nasdaq smashed past 4000 and is on the way to 4100, with a 240 dollar bounce in 2 weeks. The rise has been relentless on the back of falling volume. The wealth expansion for the 1%ers continues as the capital required to push this market up is falling as the markets are alot more thinly traded relative to the days of old, yet the market valuation rose by $900 Bln in the past 2 weeks.

At the same time Bunds and Bonds in general remain very bid despite better news, and hawkish BoE minutes, and slightly more hawkish FED minutes. Yet the appetite to buy everything from Equities to Bonds remains in full force.

Its come to that point where metrics don't really seem to mean anything, I mean looking at the Bund trading mid 150s, with a 10 Year yield of less then 1%, to me makes no sense, despite calming tensions in Ukraine, and better data out of Germany, the Bund, like the Equities have the characteristics of a beach ball in a pool. You try to push it down but it pops back up again. 

To say these are tough trading conditions is an understatement, but in these times its a matter of trying to adapt, and in this case its about have more longer term views, as well as the obvious buy US indices blind every day.

Going forward we have Bank Holiday in the UK on monday and then US holiday on the following monday so it is likely that volumes remain depressed till we enter September. 

Update on 30Yr Bond Strategy

Its been a rough week for the strategy as we had 4 losing trades and 1 wining resulting in a net 15 tick loss. The slow grinding and low volatility has not been kind to the results, but overall its still up small. Hopefully September will work out better. 

Buy everything as Bonds and Stocks back to Highs

So the little sell off we had lasted a week, and now the markets have pushed up massively from lows. The NASDAQ has touched year highs again and ES is within striking distance. Its a very frustrating environment right now, as Bonds are being driven to the moon, as well as stocks, there is just no sign of anyone selling. 1% Yielding Bunds are being pushed up on a daily basis, and while this all happens, volumes are touching 50% of the normal for the year as interest is falling rapidly.
It takes so little to push everything to highs and while this is the case we will continue to hit new high after new high as the market doesn't care about anything apart from yield chasing through cheap money.
Worse numbers the past week has just solidified the rally as the likelihood for more longer period cheap money leaves no alternative then getting long real estate and Equities.
I don't know if we will ever return to the markets of old, but I sure hope so

30Yr Strategy recap: We had 2 trades this week, and both were winners, but in general, its just been slow markets, so more likely to get more activity as we enter into September.

Volatility Increases as Bund hit record low yield!

Geopolitical turmoil has this market on edge as Bond Yields have dropped sharply and Equities have followed suit. When both markets were going up, you knew that one had to be mispriced, and usually the Bond market is pretty good at pricing what the market is really thinking. The Bund hit a record high of 149.83 today after being 200 points lower only two days earlier. This caught me out by surprise, and I ended up taking a bit of a hit trying to short it. I guess yield doesn't make any difference right now, since they buying these 1% yielding bonds as if its the best thing since sliced bread!

There is a key difference in this market and those of a few years back, that is that a rise in volatility has lead to a rise in trading volume, especially in Bonds. In these conditions the market gave the best opportunities 5 years back, but in this case its the opposite. During the ECB press conference yesterday, probably 3k contracts got traded from Jun15 to Dec16 in 45 minutes plus, which needless to say is un tradable.
With weak data out of Germany and Italy, it seems like the Euro area will be depressed for a while longer.

My trade short ES had worked out well, but I got out a bit early, and my trade in Bunds was initially a scratch then, I reentered and had to take a hit, although the path of least resistance seems up, I think risk/reward wise, with Yields where they are I feel more comfortable having a downward bias to the Bund.

Looking to next week, the main event is the BoE Inflation report. Hopefully this will move Short Sterling alot and give some opps.

Finally an Update on the 30 Yr Bond Strategy. Its been a pretty tough couple of days with the one way action of the Bond market which has resulted in a draw down the past week, but over the longer term its still positive, so i'll continue to monitor it. Generally the trade wouldn't take place before Non Farm payrolls, but for curiousity it was done on a demo account.