Too early to determine Y2K impact
Each evening we focus on the most interesting aspects for the upcoming trading day. The 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 in advance of the markets opening. Therefore, overnight events may alter the outcome of these observations.
At the time this is being published, the S&P Globex Futures are trading 2.0 points lower and the bond market is trading up 1 tick.
It’s too early to say what impact Y2K will have on the markets but we should get some indication tomorrow morning (see tonight’s Stock Market Outlook for more information and a poor attempt at a joke).
Remember, markets may be thin as many players are on vacation. This, combined with the Y2K problem could increase volatility. Consider this should you decide to trade.
Markets in fast moves upwards often only consolidate for a few days before heading higher. With that said, the March Canadian Dollar [CDH0>CDH0] is in a fast move and in day two of a pullback from highs. Look for a possible buying opportunity here.
March Corn [CH0>CH0], on the Pullbacks Off Highs List, appears to have stabilized. It’s too early to tell, but this suggests that it may be putting in a bottom. Look for a buying opportunity here.
The February crude complex (oil, heating oil and unleaded gas) sold off today. This is not the type of action you would expect in contracts near life-of-contract highs. Watch the behavior of these contracts going forward (it’s too early to pick a top here) for possible shorting opportunities.
Volatility Watch
I’ve always had difficulty trading low volatility situations around holidays. Therefore, if you decide to trade these, I suggest you watch for a “head fake†(i.e. a false move) and then possibly look to trade in the opposite direction.
February Gold [GCG0>GCG0], remains on all three Volatility Explosions Lists. Continue to watch for a larger-than-normal move (in either direction) as volatility reverts to its mean.
Best of luck with your trading on Friday!
PS-Reminder: Protective stops on every trade!