Titan Capital Group Adds Trading Staff

Titan Capital Group LLC, a New York-based alternative investment manager specializing in volatility trading strategies, has appointed two new Traders to its financial team, Collin Mahoney and Katie Mullen.

“We’re delighted to have Collin and Katie joining Titan Capital,” said Titan Capital founder Russell Abrams. “Titan Capital has benefited from elevated market volatility this year and our expanded team will provide added depth and support to our trading operations.”

Before joining Titan, Collin Mahoney served as volatility trader at Evolution Capital. In that position, he implemented proprietary trading strategies on Asian indices. He also held posts at MF Global as an Institutional Derivatives Broker on the floor of the American Stock Exchange. Collin Mahoney graduated with a Bachelor of Science in Finance from the Tobin School of Business at St. John’s University.

Prior to joining Titan Capital Group, Katie Mullen held positions with PIMCO in both the New York and Newport Beach offices. At PIMCO, she held posts as a Trade Associate with the equity team and Derivatives Portfolio Associate. Prior to PIMCO, Katie Mullen was a trade support analyst at Bank of America. She received a BSE in Industrial and Operations Engineering from The University of Michigan.

About Titan Capital Group:
Established in 2001 by Russell Abrams, Titan Capital Group has been recognized through numerous industry awards and nominations.

Titan Capital Group currently manages two strategies, a global volatility vehicle and an Asia volatility vehicle. Both strategies hold primarily liquid, short-dated instruments and utilize a statistically-based approach to identify relative value opportunities.

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Markets at Inflection Point : Volatility Continues as Investors Long for Government Intervention

October 7th, 2011:

The real economy continues to limp along as illustrated by the broad unemployment rate, which has not budged lower since the official end of the great recession in June 2009. The markets are gyrating as investors long for government intervention.

Meanwhile, governments are obliging the market by leaking potential tactics and responding to the reaction these leaks evoke. In reality, governments’ hands are tied by an electorate that no longer accepts the idea of socializing the losses and protecting private investors at all costs. Witness the elections in Germany and the Occupy Wall Street protests in New York. Social unrest is increasing as living conditions for the average person have not improved. Stock markets are therefore following the credit markets, having recognized that pain from upcoming defaults will most likely be borne by private investors and not governments.

As always, the only two certainties in life are death and taxes. Death to bailouts is now a given, as are more taxes given the unsustainable deficit level. Combine these high deficits with record high corporate profits and even the Republicans are talking about raising government revenues, albeit by cutting corporate deductions.

So where does this leave the stock market? The real economy is far better off with lower commodity prices and a strengthening U.S. dollar. Yet these days, the stock market gets much of its earnings growth from the weakening U.S. dollar. The market continues to be quite volatile and finally set a new low below 1100 on the Standard & Poor’s 500 Index, only to swiftly rally up to the 20-day moving average of 1163. The 50-day moving average of 1178 is also quite close, and the rapid move higher has brought back optimism and eliminated the oversold condition.

Thus we find ourselves at another inflection point. The market could rally above the 20-day and 50-day moving averages, followed by the 20-day moving average rising above the 50-day moving average. This bullish scenario would set the stage for a potential year-end rally, even with a Greek default. The other scenario is not so rosy. If the market fails at these important moving averages, as it has previously, a move sharply lower should be expected. Volumes on down days are far greater than on up days, so there is probably another leg down and a Greek default to occur before a firm bottom can be established this year.

We are now in the fourth quarter and, just like a football game, each decision becomes more important and more stressful as the clock runs out to correct losses on the year. Any moves lower will surely lead to a new VIX high on the year because deleveraging will continue. This market is run by traders and not investors.

Market Volatility Likely to Continue

Russell Abrams Offers Market Commentary

Equity markets volatility has exploded since the Standard & Poor’s 500 broke the 200-day moving average at 1285 and later broke through the head-and-shoulders neckline of 1260. These steep moves are approaching a magnitude not seen since markets collapsed in the fall of 2008.

Like then, a change in sentiment and hope of government support are far more important than the fundamentals. When will this volatility end? History says it could take anywhere from two more weeks to 10 more weeks. It will depend on whether the Federal Reserve announces a third quantitative easing (QE3) program at the end of August, which would bring some stability to the financial markets (but unfortunately also destroy the real economy). If the Fed simply passes the ball to Congress to act, the volatility will continue.

As we approach the Fall, risk aversion will increase should the government fail to announce outright support for the markets. Indeed the majority of bullishness is based on the belief the government will be coming to the rescue of financial markets. Should they not appear, investors will vote with their feet, and the ride down will be very bumpy. Volumes collapsed on the ride up and have exploded on the move lower.”

“Given that most emerging markets have already established firm downtrends, it is difficult to imagine a catalyst outside of QE3 that can lift the equity markets. In my view, feeble efforts such as the ban of short sales or government announcements of heightened market scrutiny will only increase volatility, but these should be expected as leaders debate whether to intervene or let the markets move to equilibrium.

Hedge-Fund Managers Seek Gains Amid ‘Slow-Moving Train Wreck’

NEW YORK (Dow Jones)–If hedge funds have any consensus coming out of Thursday’s more than 500-point selloff, it probably is that they aren’t going to bet on a U.S. economic recovery gathering steam or the equities market stabilizing anytime soon.

“The market is now down 10% on the quarter and recently broke through the 200-day moving average. This is a key technical indicator and could portend a significant correction in the near term as each time this has happened in the past the market has gone down an additional 5% to 20% in short order,” said Russell Abrams, founder of volatility arbitrage fund manager Titan Capital Management.

Short volatility positions accumulated over the past two years–that is, bets the markets will stabilize, such as shorting “fear indicators” like the Chicago Board Options Exchange Volatility index, or VIX–could produce a severe jolt if investors are forced to reverse those trades and cover their short positions, he said.

Asset managers and investors until now had been split about what to focus on: positive corporate earnings or macroeconomic woes. Thursday’s plunge brought the nation’s fragility back in focus.

“The U.S. is a house of cards now,” said Steve Shafer, chief investment officer of global macro fund manager Covenant Investors. “It is a slow-moving train wreck. The problem of rising debt to GDP will be with us and periodically inflict pain on us in a recurring manner just like what we saw yesterday.”

His fund suffered modest losses Thursday as a short position in U.S. Treasurys backfired and investors fled to the instrument for safety.

But Shafer said the long-term thesis of a weak U.S. still holds and has gone to add more short positions in U.S. Treasurys and long positions in hard assets and natural resources amid the selloff.

“We’re layering positions in hard assets, natural resources like copper, corn, coal, crude oil and natural gas. These are assets where China will over time move from net exporter to importer because of their rising per capita income and urbanization,” he said.

He said investors were caught up in an overly pessimistic view about the possibility of China having a hard landing–a notion that proved to be irrelevant as China’s weak growth is still “quite strong compared to the U.S.”

Stephen Jen, a managing partner at SLJ Macro Partners LLP who was Morgan Stanley’s head of global currency research until 2009, said on the currency front, the U.S. dollar will likely stay weak, partly as the Fed willed it to be. “The Swiss franc and Japanese yen remain good safe havens, and the fact that their central banks intervened gave investors a better entry point,” he said.

While many investors are tiptoeing in the U.S. equities market out of fear, Titan’s Abrams is being bolder. “In 2008, we had a lot of currency options that fared quite well. The issue now is investors are clearly more levered in equities than currencies, so the volatility and gains probably are in equities this time,” he said.

The VIX spiked as much as 35% Thursday and lingered around 38 Friday. While the climb was fast and furious, it is still off the near-80 high at the peak of the financial crisis.A possible reprieve, however, could be on the way.”The debt-ceiling debate means that if the U.S. government is to commit to austerity, the scope of further fiscal stimulus would be very limited. This would in turn make it more likely for the Federal Reserve to adopt QE3,” SLJ Macro Partners’ Jen said.

-By Amy Or, Dow Jones Newswires; +1-212-416-3142; amy.or@dowjones.com