"Some say the world will end in fire, Some say in ice. From what I've tasted of desire I hold with those who favor fire." - Robert Frost
The IntercontinentalExchange (ICE) saw some fire it didn't like this morning. On Friday, Nov 20, there was a sudden, massive spike in the value of the dollar index. Marketwatch reported: "The lead contract surged as high as 82.18, up from a 75.38 close on Thursday. Such a move was improbable given that in spot markets, the dollar's moves against major currencies such as the euro were limited to about 1%." Friday's move spiked 9%. Someone was buying long on the dollar, betting it would strengthen. The sudden spike prompted ICE to look into the matter, and they decided that all trades above 76.50 would be canceled. In short, the stampeding dollar bulls were all quietly herded back into the pen.
Oddly, this is not the first time this has happened in recent weeks. On Nov 3rd this story crossed the wires at Reuters: "NEW YORK, Nov 3 (Reuters) - The IntercontinentalExchange said it had canceled some trades in the U.S. dollar index that roiled the market early on Tuesday. The ICE Futures U.S. dollar index , which tracks the greenback's value against a basket of six other major currencies, jumped to a one-month high early Tuesday as concerns about the global banking sector ignited safe-haven demand for the greenback." I note here that when the dollar goes down, stocks move in the inverse direction and go up. When the dollar goes up, stocks fall.
The two stories echo one another, making me wonder who would have the clout and the know how to trigger such sudden trading moves in the index. Then I ran across another interesting story by Graham Summers on The Market Oracle. Summers presented charts showing which stocks the notorious trading firm Goldman Sachs was betting against by holding net short positions. Four of their top ten net shorts were financial companies, and there were two gold mining stocks and one big oil stock on that list as well. They were also betting against the Euro, indicating faith in a rising dollar. Summers concludes: "To be blunt, it’s clear that Goldman believes the financial crisis is nowhere near over: four of its top ten largest shorts are financial companies. It’s also worth noting that Goldman is betting against gold and the euro. Given Goldman’s incredible access to, and close relationship with, the regulators and federal government, I see this as further proof that we may be seeing another stock crisis triggered by a Dollar rally in the near future. Indeed, if the Dollar rallies we could very well see stocks AND commodities COLLAPSE."
So Goldman is bullish on the dollar, bearish on commodities like gold and oil, and has little faith in its banking brethren....and someone with trading clout and acumen has been trying to jump start a dollar rally on at least two occasions in the last two weeks where both dollar rallies had to be squelched by ICE.
Hummmm....
Here's another view of this situation in an excellent article from Seeking Alpha that came out on November 24.
The IntercontinentalExchange (ICE) saw some fire it didn't like this morning. On Friday, Nov 20, there was a sudden, massive spike in the value of the dollar index. Marketwatch reported: "The lead contract surged as high as 82.18, up from a 75.38 close on Thursday. Such a move was improbable given that in spot markets, the dollar's moves against major currencies such as the euro were limited to about 1%." Friday's move spiked 9%. Someone was buying long on the dollar, betting it would strengthen. The sudden spike prompted ICE to look into the matter, and they decided that all trades above 76.50 would be canceled. In short, the stampeding dollar bulls were all quietly herded back into the pen.
Oddly, this is not the first time this has happened in recent weeks. On Nov 3rd this story crossed the wires at Reuters: "NEW YORK, Nov 3 (Reuters) - The IntercontinentalExchange said it had canceled some trades in the U.S. dollar index that roiled the market early on Tuesday. The ICE Futures U.S. dollar index , which tracks the greenback's value against a basket of six other major currencies, jumped to a one-month high early Tuesday as concerns about the global banking sector ignited safe-haven demand for the greenback." I note here that when the dollar goes down, stocks move in the inverse direction and go up. When the dollar goes up, stocks fall.
The two stories echo one another, making me wonder who would have the clout and the know how to trigger such sudden trading moves in the index. Then I ran across another interesting story by Graham Summers on The Market Oracle. Summers presented charts showing which stocks the notorious trading firm Goldman Sachs was betting against by holding net short positions. Four of their top ten net shorts were financial companies, and there were two gold mining stocks and one big oil stock on that list as well. They were also betting against the Euro, indicating faith in a rising dollar. Summers concludes: "To be blunt, it’s clear that Goldman believes the financial crisis is nowhere near over: four of its top ten largest shorts are financial companies. It’s also worth noting that Goldman is betting against gold and the euro. Given Goldman’s incredible access to, and close relationship with, the regulators and federal government, I see this as further proof that we may be seeing another stock crisis triggered by a Dollar rally in the near future. Indeed, if the Dollar rallies we could very well see stocks AND commodities COLLAPSE."
So Goldman is bullish on the dollar, bearish on commodities like gold and oil, and has little faith in its banking brethren....and someone with trading clout and acumen has been trying to jump start a dollar rally on at least two occasions in the last two weeks where both dollar rallies had to be squelched by ICE.
Hummmm....
Here's another view of this situation in an excellent article from Seeking Alpha that came out on November 24.
