Deflation/Risk Aversion Start to Tighten the Noose…

Monday, January 12, 11:31 PM ET - The weakness seen in Ags, metals, energies, equities, commodity currencies, and strength in the dollar brought back vivid memories of the financial malaise seen throughout Q3-Q4 of 2008. The question as traders going forward is how to play the reinitiating of a pro risk-averse sentiment in the market. In our weekly preview of Netto's Numbers, we outlined the metrics setting up the equity sell down and what key technical levels would give us a nice proxy of taking profits. As noted last night, the March 900 puts served today's price action extremely nicely as not only did we get a nice directional move in favor the puts, but implied volatility crept up across the volatility structure. This move was corroborated by the move in the USDJPY, which had decoupled from its close correlation until recently. The British pound was the one bastard child currency today as GBPUSD, EURGBP, GBPJPY all got crushed. I am looking for any morning strength tomorrow in these crosses to get sold into by the end of the US Equity close. I am hosting a webinar on trading options to capitalize on these markets and how to create some of the most dynamic exposure strategies out there…please visit http://www.tradebondfutures.com/products/item9.cfm to learn more about the January 24 webinar… Tomorrow's updated pivot points are as follows… . . . (to read the remainder of this article, please log in below.)