On Commodity Blow-Up

I am shocked on the scale of commodity fall out today.

The markets felt like something’s up in the last couple day’s but this look’s absolutely overdone.

Even more weird is that stocks held up nicely.

It almost looks like something blew up (hedge fund, trading desk, somebody’s cross-asset hedges) and needed to wind down fast.

We will know in the coming days if something happened or this is self-fueled panic and margin induced sell-off.

I have put some light longs in the last hours of trading. Yeah…maybe not smart, but we are talking here about 4+ standard deviations moves (1 in 15,787  event, so expected to occur once in 43 years) so I felt tempted. Waiting for the commodity plunge protection team. Will close fast if this continues tomorrow.

We will see what happens.

This entry was posted on Thursday, May 5th, 2011 at 1:44 pm and is filed under Markets. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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