ONE-TWENTY TWO: Trading Financial Markets
Exploring the poetry in financial markets for students of money and economy since the year 2000.
In the wake of the SEC’s charges of fraud against Goldman Sachs (GS), I recommended trying a pairs trade going short GS and long Deutsche Bank (DB). I was betting that either the SEC charges would blow over and DB would rebound sharply, or the gravity of the charges would intensify and GS would sell-off … Read more
July will deliver an up month for Goldman Sachs (GS) for the first time since March and only the third time since it peaked nine months ago. GS is up 12% for the month of July, handily beating the 7% gain for the S&P 500 and and the 6% gain for XLF, the SPDRs Select … Read more
On Friday, CNBC’s Fast Money asked the question “Has Goldman Bottomed Out?” The answer to these kinds of questions is always a “maybe” or a more resolute “perhaps/perhaps not” but I was a bit amused at the reasoning provided for guessing that Goldman Sachs (GS) has reached a bottom: It acted well on Wednesday by … Read more
Earlier this week, I suggested setting up a pairs trade between Goldman Sachs (GS) and Deutsche Bank Ag (DB) to take advantage of an apparent growing divergence in performance between the two financial giants. My main recommendation rested on a put spread for GS and a call spread for DB. After thinking about the structure … Read more
When news broke of SEC charges of fraud against GS, investors quickly dumped DB out of fear that the SEC would soon target DB for its involvement in creating toxic collateralized debt obligations (CDOs). While the selling in GS has gained momentum, the selling in DB has ever so slightly reversed. On Monday, GS broke … Read more