Today’s missive – R&R - is not about rest and relaxation, but “rollover” and “rumors.”
Thursday begins the S&P500 futures rollover. This is when traders switch from December (the current contract) to the next contract month, which is March 2012. Stock futures trade quarterly. Please switch all of your charts before the open.
Rollover is normally an unfriendly trading environment because traders gradually switch from one quarterly contract to the next. With volume spread between two contracts, we often see small choppy ranges; however, we’re not in normal times. The current times are all about financial central planning, mad-Keynesian spending plans, bailouts, currency rigging, etc. And since there is currently a little of all of the aforementioned on tap, the market may indeed be active during this roll.
In fact, the most recent “roll” was one of the best I can remember. I’m expecting that again.
The other “R” is rumors and we had a lot more of that nonsense today. This morning there was a rumor that may become fact, which mentioned Germany would force its banks to (finally) recapitalize like the US banks did. The banks will be bailed out by a rescue fund called Soffin. The market put in its low and every single sell on the bid was covered, while every available offer was lifted.
The other rumor was denied within roughly 30-minutes but that didn’t matter, the initial sell-off was simply bought back before the close. It started with more BS from a news outlet (NIKKEI): G20 CONSIDERING $600 BILLION IMF LENDING PROGRAM FOR EUROPE.
How many super-special IMF, G20, EFSF, ESFS-squared, ECB, EFSF bonds, etc bailout funds were there? Too many to count in my opinion. However many; how many were legitimate? None.
After this was released there was a +14.50-point EXPLOSION…then promptly denied. But as mentioned above, the market re-rallied into the close. After all, why would the truth matter to Fraud Street?
Trade well and follow the trend, not the so-called “experts.”
Founder & President- Trading Advantage http://www.tradingadvantage.com
Larry Levin's Trading Advantage is a leading investment education firm that empowers traders to achieve and surpass their financial goals. More than 50,000 students have used Larry Levin's proven techniques for powerful results.