When A Market Refuses To Go Down On Bad News
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 2.00 points lower and the Bond Market Futures are up 3 ticks.
Last Thursday, I talked about the fact that the market “didn’t care†about last Wednesday’s sell off and the situation in Yugoslavia and therefore had the “potential to explode†early next week. Today, even as the situation in Yugoslavia worsened, the market climbed sharply. The moral is, when a market refuses to go down on bad news it’s likely headed higher. Going into tomorrow, you probably should wait for follow through to the upside as the index futures are extended and trading lower overnight.
There are two markets that look interesting to me tonight.
On the Pullbacks Off Highs List, May Wheat [WK9>WK9] looks interesting as it rallied today ignoring the weakness in the other grains.
On the Turtle Soup Plus One Buy List, the June Swiss Franc [SFM9>SFM9] looks interesting after hitting major new lows but failing to hold there. Look for a possible “bounce†here.
Best of luck with your trading on Tuesday!
Dave Landry
Director of Research
TradingMarkets.com