Election Day

by Larry Levin

The best thing about Election Day is not necessarily a new president. In my opinion, the best thing about Election Day is that those annoying, bickering, childish commercials that bombard our senses on a never-ending basis - mercifully - come to an end. Next comes the coronation of Barack Obama, as he takes the ruby-red slippers off of George Bush's feet, prompting him to shrivel up and goes away, a-la The Wizard of Oz.

The market was up quite a bit today, once again on low volume. The longer the low volume rally lasts, the closer we are to a correction. Think of a metal tape measure: it cannot go up from its housing forever; with nobody supporting it, it will collapse. That being said, the market can probably go higher still. If it reaches 1067.00 / 1075.00, however, I would expect the metal tape measure to fall.

So what's causing it to rally? In a word: LIBOR. The LIBOR rate has fallen for 17 consecutive days. It was the LIBOR (London interbank offer rate) that had the Fed and Treasury so concerned. Many interest rate only ARM's and other products that were used to fraudulently purchase homes are tied to LIBOR. It is also tied to inter-bank lending, so when it comes down more lending and borrowing can be done.

Today's rally certainly wasn't due to the economic data. The Commerce Department reported that factory orders fell 2.5% in September after falling a revised 4.3% in August. Umm, not good. Professionals guesstimators, aka economists, were expecting the data to just show a 0.2% drop. This once again proves that economists are as useful as laminated pizza.

Factory orders fell TWELVE TIMES more than expected because of a sharp 5.5% drop in orders for nondurable goods like food and clothing, which was the biggest decline in two years. People are pulling back spending everywhere.

Tomorrow's data brings us ADP employment and ISM services reports. If the economic and current market trends continue, the news will be bad, then ignored, and the market will continue to trade higher on low volume. I have a feeling this will continue to Friday when the monthly jobs data is revealed - and who knows how the government will attempt to manipulate that data.


Previous Day's Trading Room Results:

Trade Date: 11/4/08

E-Mini S&P Trades*
(before fees and commissions):

1) Globex sell @ 9:35am at 995.75 = +1.75 (1 lot)

2) OTF buy @ 10:30am at 999.25 = +3.75 (1 lot)

3) Engf buy @ 12:40pm at 1000.00 = b/e (1 lot)

4) Algorithm positions (4)...combined daily total...+12.50

ZB (30 Year Bond) Trades*
(before fees and commissions):


1) Buy @ 8:20am at 113.185 = -0.5 (1 lot)...total...-0.5



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