Setup, Talk up, and Take Down

If I had to write a novel about the recent dollar rally I would suggest the following outline:

1. The Dark Side receives information of an impending increase in the Discount Rate.
2. The MOPE for year-end is the economic recovery
3. Since the Dark Side put on the Greek OTC derivative swap they have this proprietary knowledge.
4. The Dark Side turns on the Greeks in the media commentary.
5. The easily painted CDS OTC derivative market screams Greek debt failure.
6. The Dark Side downgrades Greek debt.
7. A sharp rally occurs in the euro that shocks the Dark Side as the euro climbs more than 100 points on an assumption Greece will be bailed out, which they will be.
8. The Dark Side having seen that euro rally bails out of their short euro position on the event of the Discount Rate being raised to 0.75%.
9. The Dark Side pockets 2.3 billion profit on their 9.9 billion dollar outrageously leveraged short euro position.

Jim describes a classic example of setup, talk up, and take down. Well done.

Euro and the Commercial Traders COT Futures Options Stochastic Weighted Average of Net Long As A % of Open Interest:


Source: jsmineset.com