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Thread: Rating agencies and max pain downgrades

  1. Default Rating agencies and max pain downgrades

    I have noticed during the past month (maybe more) that the ratings agencies seem to release their downgrades at max pain. This includes Fitch, Moody's, and S&P. Some are not actual downgrades but rather news that they may downgrade or placing something on watch for possible downgrade. The releases of these news seem to happen, as I said before, at max pain. What do I mean by max pain? It is right as when the market is about to break out intraday or versus a previous strong resistance level. When many are levered long.

    So now that Greece is somewhat resolved I look for the ratings agencies to do some rapid downgrades (or hints of "review") in the other PIIGS.

    If you doubt what I talk about in the first paragraph then take a look at your ES futures charts and compare them to the timing of the news releases. Allow for some time slack for dissemination. It can not be a coincidence when it happens time after time after time.

  2. Default

    Well here it is at 2pm EST.


    The ES was right on the edge of Friday's highs and threatening to bust over. Fourth touch and it looks like a breakout. BOOM comes the news. Only 4 point drop in ES but damage might already be done. We will see. I did buy the dip for a daytrade and if it breaks the highs then will hold longer. If not then a stop is your friend.

    Watch out for downgrades of US debt coming also. Saber rattling if debt ceiling not raised. After that they'll rattle about downgrade if debt level is not reduced. Watch for it in the future.

  3. Default

    To be clear I was looking at the ES futures 24hr 60min chart. It had a nice channel and a bull flag it was about to break out of to the upside before the news hit. It is academic whether it would have or not have broken out at this point.

    On the trade I did get stopped out for -5 ticks under the pivot. Took the trade again on the S1 and sold at the pivot. Looking for a retest of S1 for a re-entry but it doesn't look like it will do it now. Will not re-enter the trade if the S1 gets touched after 3:30. There will be another trade another day.

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    Without a doubt some big bear out there is hurting. After the market ramped up overnight the first thing I notice is the news of possible downgrades, warning, etc about Italy. Market retreats.

    Right after today's Bernanke pump, as I call it, we get this... "Fitch says Italy's credit rating would come under pressure if it misses fiscal targets." Market retreats before ramping up again. This is big time when you have ratings agencies in your pockets.

    Big question - if Greece is supposed to be contained then why are they still looking at contagion? You can model this like diseases spreading but for now the only diseases are the rating agencies. I'm sure there are risks associated with Greece but their willy nilly news of "review for downgrades" is just turning things into a self-fulfilling prophecy.

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