October 31, 2008
It’s certainly tough to be a trader, as seen in these “sad guys on trading floors” pics.
And as evidenced by this gem of a quote from Morgan Stanley’s David Darst on CNBC: “We tell the young people who are looking for a job on Wall Street now, it’s either Shanghai, Mumbai, Dubai, or goodbye.”
The S&P futures are struggling in early trade after a positive close on Thursday and what’s looking to be a positive week overall. Lind Plus Senior Market Strategist Jeff Friedman notes it’s last day of the fiscal year for many mutual funds and hedge funds, and that could add pressure amid redemptions. On the flip side, the last day of the month has been tied to “window dressing” activity as managers try to get their losers off the books in favor of better-looking stocks, and that can lift the market. “The market is suggesting one more intraday drop, but we’ll see how we close the week. We have two forces fighting each other, and it could be a choppy trade,” he said.
According to a Bloomberg article, selling by money managers to meet redemptions helped push the S&P 500 down 18 percent this month, the most since the crash of 1987.
Friedman notes the December S&P futures closed above their 20-day moving average at 952 on Thursday, a positive sign, but technical momentum indicators, Stochastics and the Relative Strength Index (RSI), are still bearish. “The bears still have technical command of the market,” he said. He said a weekly close near the top end of the range would mark a reversal, while a close above last week’s high would mark a key reversal. He sees 970 as minor resistance, near Wednesday’s high. A fall under 825 would likely bring 768 into view. The10-day moving average and support is at 921, Friedman said.
October 30, 2008
October 29, 2008
Financial markets are in wait-and-see mode ahead of this afternoon’s conclusion of the Federal Open Market Committee meeting. A decision on interest rates is expected at 1:15 p.m. CT. Based upon the October 28 market close, CME Group’s 30-Day Federal Funds futures contract is currently pricing in a 100 percent probability that the FOMC will decrease the target rate. Odds are 54 percent for a 0.50 percent cut, and 46 percent for a 0.75 percent cut. The Fed funds rate currently stands at 1.50 percent. See CME Group’s Fed Watch page for more details.
Lind Plus Senior Market Strategist Jeff Friedman said participants are factoring in lower rates, which helped drive what he dubbed a short-covering rally in stocks Tuesday. However, he said technically, the bears still have the advantage amid a weakening economy. “There still are no significant technical clues we have a bottom,” Freidman said, adding that traders should watch for weekly high closes in futures as indications of a true turnaround.
October 28, 2008
Softs Looking Soft: Coffee, Cocoa, Sugar
By Ken Hughes
The softs market has been hit by the financial market meltdown, as just about all commodities have declined on ideas global demand is set to slow significantly. I’ll take a look at the fundamental and technical picture for coffee, sugar and cocoa futures. (more…)
Letting Some Air Out of Inflated Yen
by Phil Streible
The Japanese yen is starting to back down after gaining sharply against both the U.S. dollar and euro currency in recent days. Unwinding of the carry trade has artificially inflated the yen, and policymakers seem ready to let some air out.
The yen has exploded to the upside based on what’s known as the carry trade, where investors borrow in currencies with low interest rates and then buy assets in countries with higher rates. Japan’s benchmark interest rate stands at 0.5 percent, while in Europe the key lending rate is 3.75 percent, in Australia it is at 6 percent, and in the U.S., it is at 1.5 percent. This unwinding of the carry trade in recent days has spurred the yen to a 13-year high against the U.S. dollar, and a 6 ½-year high against the euro. (more…)
October 27, 2008
