The unemployment number, for much of the 1980’s 1990’s and up until about 2007, was often the most anticipated number. Very often the volatility that went along with that number meant it was one day that both bulls and bears had a chance to make good money trading the markets through the day. Specifically the 30 year down to the euro dollars, (the entire yield curve) would rock.
I continue to think that with interest rates at 0, effectively, and official unemployment hovering around 10 percent, the impact of the number as a trading opportunity has been cut significantly. Simply stated, its an opportunity, but not the way it once was.
Today Un employment rose to 9.8 from its previous 9.6. I don’t think the market really moves on this number again unless we start back up past 10.0 or break below 9.0
For the Dow futures, an initial 100 point spike down did not last longer than the first 20 minutes of trading. We then saw an 80 point rally (slap in the face) to everyone who got short on the number, had no follow through, and then had to scramble for the exits. Back between 1998 and 2003 when I was a daily trader in the Dow futures market, we regularly had 200 point trading ranges, which we would trade throughout the day, with multiple moves. Pre-dot com bubble, we had an incredible stretch of volatility.
That’s one reason I laugh when the news coverage discusses 100-300 point moves. You’d think every 100 point down draft was an outbreak of hemorrhagic fever.
I still think we should go for that 5,000 point mark. It’s just too tempting a target for the bulls. IF, and this is a big IF, we can get a bullish pop, that target will have to be hit, and will be heralded.
We saw the US dollar get hammered today, down almost a full penny. That was fresh kerosene on the bullish fan for the grains. Especially, now with Wheat harvest going on in Australia under a rain deluge, combined with drought worries here in the US and Russia. The funds look to be in the process of building an initial long position. Until we get July Wheat above 8.00, however, I am reluctant to get too excited on the long side.
Technically, Corn and Beans are getting healthier. I’d look to be a buyer on breaks until we get a better sense of the acreage plantings on tap for 2011.
Cotton continues on its historic trend higher, and this will cause some farmers to forgo beans for cotton. It will be a totally economic decision, based on where they can make the most profit.
We’ll also see how many farmers will opt in to plant wheat this year. I have some clients who have not planted wheat in years, telling me they are going to plant some this year. Price brings out supply.
Finally, I am never a big fan of taking positions home over the weekends. Too many things can happen over a weekend which could ruin your day, financially on Monday Morning. The only exception is if I have a good enough profit built in that an adverse move against that profitable position won’t result in un acceptable losses. That being said, a short position had better have a buy stop, and a long position needs to have a sell stop.
This Sunday Night, Ben Bernanke, The Fed Chairman, will be featured in a 60 minutes story which will be aired on Sunday Night. I have no idea what he’s going to say, what the subject matter is, how it will have been edited, if at all..
All I know is that such an interview could be the catalyst for an unexpected move.
I am leaning towards a bullish surprise, but honestly, its a coin flip as to what he will say and even more of a coin flip as to whether or not the market’s move in the direction they “should”. In other words, just because Bernanke might say something deemed as bullish, there is no guarantee that the market will move higher. It could be a fade.
We are expecting our first 6 inch snowfall here in the Chicago Land Area. I am looking forward to the weekend. Hope you all have a good weekend too.
Best
CER
