EBay May Affect
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 8.25 points lower and the Bond Market Futures are trading up 2 ticks.
Heads up, after the close Ebay [EBAY>EBAY] announced slightly better-than-expected earnings. In spite of this, the stock is trading down over 9 points lower in early Instinet after hours trading. This will likely weigh heavy on the Internet stocks and judging from the Globex S&P futures so far, possibly the entire market.
Last night, I mentioned that the December Dow Jones futures [DJZ9>DJZ9] closed poorly and looked poised to resume its downtrend. Tonight, the December S&P futures [SPZ9>SPZ9], on the Pullbacks Off Lows List, have formed a similar pattern. Look for a shorting opportunity here.
February Pork Bellies [PBG0>PBG0], on the Pullbacks Off Highs List, close well today and looks poised to resume their uptrend. Look for a buying opportunity here.
Volatility Watch
Historical Volatility is based on closing price only. Therefore, even though the bond market has seemed volatile lately intra-day, essentially it has gone nowhere on a closing basis for the past 6 days. This action (or should I say lack of action) has it on the Volatility Explosions-Multiple Days List. Watch for a larger-than-normal move (in either direction) as volatility reverts to its mean.
December Corn [CZ9>CZ9] rallied earlier today but reversed to close poorly. This “head fake†move up may have trapped longs on the wrong side of the market. Look for a possible shorting opportunity here as volatility reverts to its mean.
Best of luck with your trading on Wednesday!
Dave Landry
PS-Reminder: Protective stops on every trade!