Yugoslavia Had No Effect
Each evening we focus on the most interesting aspects of the upcoming trading day. These comments are based on observations of the nightly updates of the Futures and Market Bias pages. They are provided for educational purposes only and are not intended to be direct trading advice. Also, keep in mind that these remarks are made up to 12 hours before the markets open. Therefore, overnight events may alter the outcome of these observations.
At the time this is being published (Thursday night), the Globex S&P futures are 1.30 points higher and the T-bond futures are up one tick.
Today’s market action was very interesting to me. Wednesday’s sell-off, combined with a number of Market Bias Indicators pointing lower and the situation in Yugoslavia (which seemed to worsen by the hour) had virtually no effect on things. In fact, you would have to assume that many traders and money managers would not want to own stock over the long weekend, especially as world events take front stage. The market though, ignored all this, absorbed the selling and moved higher. It was basically saying it did not care about Wednesday’s sell-off or Yugoslavia. If the weekend does not bring any bad news, the market has the potential to explode to the upside early next week.
Tonight we have three Market Bias signals pointing lower. Two of them are more than one day old and in light of today’s positive price action I personally do not put a great deal of emphasis on them for Monday. The Globex futures on Sunday night will basically tip their hand as to how things will play out on Monday morning.
The energies, May crude oil [CLK9>CLK9], May unleaded gas [HUK9>HUK9] and May heating oil [HOK9>HOK9], despite being down for the day, all closed well and are pausing near new highs. Look for a buying opportunities here.
The June Swiss Franc [SFM9>SFM9] and the June D-mark [DMM9>DMM9] have both been in long-term downtrends, and both have now made three-bar pullbacks off lows and are on our Pullback From Lows List. This, combined with the fact that both have recently been on our Volatility Explosion Lists, suggests that we could get a large move in the direction of the downtrend.
June D-mark. Notice the three-bar pullback (a) after an extended downtrend. Source: Omega Research.
Enjoy your holiday and best of luck with your trading on Monday!
Dave Landry
Director of Research
TradingMarkets.com