Liquidity continues to be very poor and will only get worse

Since the beginning of last week, e-commerce dealers have been complaining about the lack of liquidity and the fact that it’s only going to get worse. Tonight’s FOMC statement will only serve to heighten the fear factor which will further detract from the liquidity pool. Wherever the stop-losses are, that’s where the market will gravitate towards. Getting ‘married’ to logical fundamental positions can be very costly at this time of year. I’d suggest using the big 200 pip swings to massage positions, whilst of course keeping overall exposure at around 1/2 normal levels (given the ferocity of some of the moves we’ve been seeing).

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