Monday, October 13, 2008

Monday Notes - A Different Dance

Well, we all knew it was coming ... the change in pace. The only question was could those of us that provide liquidity day after day adapt quickly enough to avoid the draws that often initially accompany a change in pace.

At this end, I never could find my rhythm until late in the day (the 2:55pm bull cup helped which finally provided some market pace) -- the low Holiday volume didn't help -- and settled for a low five-figure draw due mainly to high transaction costs and a DAX sequence that caught me a bit. While I'm not particularly pleased with the effort, I'm OK with the result as I expected a draw today, stayed out of major trouble by keeping sizes down, tried to minimize it to the extent possible, didn't give up, and had a couple of nice late afternoon sequences. Plus, most liquidity providers don't plan on making money on strong trend days, never mind when the S&P is up over 120 points on the day.

It's amazing how one can get so used to a rhythm, that even knowing the change is coming and seeing the change in tide (TICK above zero; downtrending 15-min VIX), the feet sometimes keep dancing to the earlier tune.

There's no question I could have adapted better earlier. My reads were pretty good ... it was my feet that initially kept getting in the way.

So we'll give this day to the investors. They needed a respite during this year's continuing bloodbath which isn't likely to let up. I'm keeping an eye out for possible "morning after trend day" action tomorrow and will need to be on my toes.

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