Liquidity Drought (State of the Market)
Deepak Singh
Read the complete trading notes - http://www.stateofthemarket.net/tradingnotes.htm
|
Trading Notes (Refresh the page to get the latest page) |
August 27 2008 |
|
There is a saying - "If you don’t follow the stock market, you are missing some amazing drama". Well, now-a-days, the drama is that there is no drama. Liquidity Drought Good morning. Where
is all the money going? A year back, every asset be it financial or physical
was on its way up and today We have been taught - Liquidity does not disappear, it only changes its direction. But in last few weeks - It is becoming a case of disappearance. The big issue = Where is that money going? Where are Sovereign Wealth Funds? Where are Oil rich investors? Where is the money that is moving out of Russia, Brazil and Commodity funds going? What is the new carry trade? Even Gold is getting dumped. The only asset that is being talked about: USD. But there also it's adjustment to mean. Traders were too bearish on USD during commodity bull run. The big question: Why is liquidity disappearing? One answer: Confusion on what Next. Is this a sign that market is taking a break till traders discover which way the money will move? The answer appears to be YES. The financial market landscape has changed dramatically over last few years, thanks to hedge funds and plethora of exotic investment instruments. There is always of plenty of action somewhere. Money now moves at jet speed and we live in a world of instant price discovery. In such circumstances, to see an absolutely quiet period is quite an experience. There is a saying - "If you don’t follow the stock market, you are missing some amazing drama". Well, now-a-days, the drama is that there is no drama. We have forgotten on how to deal with quiet periods. And it seems this is the new test. Read the complete trading notes - http://www.stateofthemarket.net/tradingnotes.htm Cheers Deepak Singh |
|
