Posted by: jhamon | August 12, 2009

MysteryHedgie: Strength Not Be Ignored

MysteryHedgie notes that strength is not to be ignored:

Despite the pronounced weakness in China (-4.67%) and Hong Kong (-3.03%) overnight, Western markets remain resilient today, similar to price action seen after China’s last large drop on July 29.  Different from July 29th is the large amount of upside call buying we have seen on the desk this morning, primarily concentrated in Homebuilders and yesteday’s laggards, Banks, as core financial shorts protect against possible soothing words from the Fed at 2:15.  It is hard to imagine that “decoupling” could work in reverse in anything but a global selloff (G7 outperform EM?) but after the last two years, “tail risk events” have become normal occurrences.  Still not yet time to head to the beach….

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