ETF worries
11.49 am A chunky 2.9% fall in the ASX 200 to this point with a late crunch in the US slated to ETFs and their need to provide liquidity as clients sold their holdings. So the modern equivalent of portfolio insurance that was blamed for the 1987 crash.
It's one reason I prefer LICs for my super fund. These vehicles are closed end so that they have no need to sell as a market falls, instead the well run LICs tend to be buyers.
I'm quite enjoying the fall as it will provide some fresh opportunities. Yes, I have a dud long in BHP which is also down 2.9% but it was a half size position and today is offering plenty of day trading possibilities.
3.17 pm Back at the lows, down 206 to 5820. I think the market is quite good value here especially with reporting season underway so it will probably only take a couple of buyers to generate a rally. The ASX 200 is now at the top of the very narrow range we broke out of in October and that could provide support. If global indices continue to dump then 5650, the bottom of that range, might be the near term support.
I am thinking of holding the BHP long for another day but feel that the easiest option is to day trade while the market is flying around. I've done that today - including in BHP - and made back half of the markdown on my overnight long.
In the small caps, Amaysim has pushed higher and is pretty close to a buy now. I may add a few on the close.
4.15 pm The low came in around 3.30 at 5796 but the index bounced very late to close at 5833, a 3.2% fall or 193 points.
The ETFs are acting like a short volatility (short gamma) trade where the falls drive redemptions so increasing the selling just as on the upside the buying was chasing the market. On top of that it seems as if a lot of options have been sold at pretty low levels, so again, there is a lot of forced selling, at least in overseas markets. The thing to remember is that the forced selling can quickly turn into forced buying on any rally so it should be a sustained period of volatility. Interesting times!
I decided against the AYS as I think opportunities will be there during the day.
It's one reason I prefer LICs for my super fund. These vehicles are closed end so that they have no need to sell as a market falls, instead the well run LICs tend to be buyers.
I'm quite enjoying the fall as it will provide some fresh opportunities. Yes, I have a dud long in BHP which is also down 2.9% but it was a half size position and today is offering plenty of day trading possibilities.
3.17 pm Back at the lows, down 206 to 5820. I think the market is quite good value here especially with reporting season underway so it will probably only take a couple of buyers to generate a rally. The ASX 200 is now at the top of the very narrow range we broke out of in October and that could provide support. If global indices continue to dump then 5650, the bottom of that range, might be the near term support.
I am thinking of holding the BHP long for another day but feel that the easiest option is to day trade while the market is flying around. I've done that today - including in BHP - and made back half of the markdown on my overnight long.
In the small caps, Amaysim has pushed higher and is pretty close to a buy now. I may add a few on the close.
4.15 pm The low came in around 3.30 at 5796 but the index bounced very late to close at 5833, a 3.2% fall or 193 points.
The ETFs are acting like a short volatility (short gamma) trade where the falls drive redemptions so increasing the selling just as on the upside the buying was chasing the market. On top of that it seems as if a lot of options have been sold at pretty low levels, so again, there is a lot of forced selling, at least in overseas markets. The thing to remember is that the forced selling can quickly turn into forced buying on any rally so it should be a sustained period of volatility. Interesting times!
I decided against the AYS as I think opportunities will be there during the day.
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