Yo Pit Crazies,

Take a look at the Spot Gamma talk this week for Thursday. Also, if you have not checked out Delta Strike and the Little Engine that Could there still is a chance to do so here.

This was a story in the Wall Street Journal today:

What I find most interesting is this:

The USA, with all its potential, got downgraded just recently and set the market for stocks into a bit of a tailspin. When you read the rest of this article, you will see why,  I apologize it is behind the paywall but if you are trading you should subscribe to the WSJ anyway. I will draw the parallels.  

The Greek Tragedy of 10 years ago is playing our right here in the old USA. The Greeks had a leadership failure which then voted in someone who would keep the good time government spending rolling, only to lead to further disaster. Leadership crisis in the USA, check. The Greeks decided to have a common sense government and they cut their debt from 190% of GDP to %146 in 10 years. This is the missing part for the USA. No Check.

It is possible to fix any self created problem but the USA does not have the EuroZone to impose a regime.

It has something else.

The USA has a free floating bond market

2010 was the bottom of the market for Greek equities and it took a decade to recover after 30 years of total mismanagement. The USA is only 10 years into Quantitative Tightening (QE) and right now it has ended with a thud to be replaced by Quantitative Tightening (QT). The issue still is what the Fed takes away, the USGOV spends. The bond market knows it.

That is where we find ourselves. Lack of leadership and endless spending. Same as Greece, 10 years ago. That is the backdrop for the volatility we see today. I used the OP Engine to produce a volatility trade on the iShares iPath S&P 500 ST VIX future ETN (Ticker: VXX) in the Easy Trade Button today.

Rates were lower today and that helped lift stocks. Beside the current Middle East crisis, VIX has not gotten back to low lows of early Sep once rates started getting into uncharted territory. The flipside is the market does not want to sell off so little VXX backspreads like the one above could pay nicely.

If you are not using smarter tools to build a trading edge before you trade, you are a step behind. Check out the Easy Trade Button today.

To Your Trading Success,

AG