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Silver Wheaton Corp. Message Board

  • yourdeadmeat69 yourdeadmeat69 Aug 20, 2013 7:13 AM Flag

    Been talking the effect on interest rate pops for about three years now

    Interest rate pops, whatever the source, the immediate market reaction is:discount the entire 3% mortgage rate pop all at once, and that is exactly what is happening.

    Ending mortgage backed buying prematurely or on time, the market is ready for a 25% selloff, when it reaches critical mass. At about minus 5%, some capitulative event will occur. It is indiscriminate, winners sold with losers, panic, and the market's swept away in the undertow. Add in program trading, you can see why the markets stop the insanity program which trips at 5% intervals, made headlines yesterday

    Interest pops that will cripple progress made so far, however feeble, and send us careening downward.

    The bulls in Spain are mean and stupid, but when they run, you don't get in their way. This talk every week, it's "only" 1.5%, we grew 18% since beginning of year, is the "adult" version of I hope I hope I hope....the market has sold off nearly 3.75% in two weeks, we get to rehash month old FOMC notes as if we didn't know what they already said tomorrow Wed 21 Aug--and watch as stockholders of the Western world scare themselves sillier and drag the world back into recession part two. Silver is not immune.

    My litany, a broken record, is, sell out of the money calls into January, buy short term in the money puts, if you wish to preserve core positions in ANYTHING. I expect a fifty percent retracement on the way back to 1175 on the S and P.

    Argue all day about what QE did, or should have done. But PERCEPTIONS rule and at worst, it was a dam holding back what is happening now. It may not have done anything for the economy, but people THINK it did. It did lower mortgage loan rates and inflate housing to Aug 2004 levels. Housing prices are still improving as the last looky loos scuttle through the interest rate door. But you add 30% to the monthly cash flow requirement, people expect price reductions.

    Take appropriate precautions. IMHO

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