Tuesday, June 30, 2009

Morning Briefing for June 30th

After a very narrow range trade on Monday afternoon, we're now seeing very narrow trade in the overnight session, perhaps in anticipation of a slew of economic numbers later this morning (bottom chart). We remain above the 6/25 and 6/26 highs (purple line); a move back below those levels would target the range midpoint around 912.50. Strength sustained above the line would target the late May/early June trading range, as part of the longer ongoing range trade. Note the timing of economic reports coming out in the U.S. (see Twitter post) and overseas this morning. If those cannot take us out of range trade, I'd expect quite a quiet afternoon.

8:51 AM CT - The Market Delta chart nicely shows how we've moved back into the narrow range when buying after Chicago purchasing manager data could not sustain a move above the overnight range. With strength in the U.S. dollar vs. euro and weakness in oil and gold this morning, themes will be weighing against upside for stocks. Let's see how those themes respond to consumer confidence data at 9 AM CT.

1 comment:

Daniel said...

Reasonable expectations, and an excellent orientation and framing of the day's outlook. I would only add: "Be aware of the strong getting stronger and the weakest of the weak also getting stronger, on the final day of an extreme fiscal quarter, as portfolios position for the quarterly photo session."

You make LOGIC look good, Dr. Brett.

One definitional question, from your previous blog, where you wrote:

>> "active traders are having more P/L problems this year"

I'm not sure I understand what this means. If just a euphemism for "they are taking losses", then it's clear. But it could also mean that there is, because of the nature of market action, unusual difficulty this year in locating logical stop-out exit points-- ie. an endemic risk management problem.

Thankfully I have not been taking losses this year, BUT I have been observing the second problem, locating logical risk management points.

Other people having losses is not anything I've ever considered as a "problem", especially if they are losing their money to me.

If it's my losses, not surprisingly, I feel differently...

If the meaning was the former, no comment is needed, the meaning is clear... but if the latter, some interesting considerations arise-- most of them well explored by your colleague Rob Hanna on his excellent site, in his work on the meaning of 'True Range Variance'.