The Waiting Game

by Larry Levin

My goodness, will the markets ever open for business? The momentum is negligent; it's as if there are only 2 traders in the S&P futures pits trading against each other. There is NO ACTION! Today was another (every day this week) incredibly slow no-range day with low volume. How agonizing it is for a day trader.

I suppose the lack of action is due to everyone waiting on tomorrow's monthly payroll report. However, since the odds are currently rather high that the report, no matter what it says, will be ignored - I wonder why we wait at all. Most economists are expecting this report to show that the US has shed another 500,000 jobs. But that's just the official number. This morning traders in New York started to spread their "whisper number" of 600,000 to 700,000 jobs lost. Hmm, now we have quite a range - don't we?

This is one of the more aggravating and ridiculous games played on Wall Street: the whisper number. The so-called whisper number is usually an unofficial and unpublished earnings per share (EPS) forecast that circulates among professionals on Wall Street - generally reserved for the in-crowd. That may be how it started, but it has grown into a way to simply ignore the official data when needed.

Have you ever read an amazingly bad earnings report or piece of economic data and wonder - how in the hell did the market ignore THAT?! It was almost assuredly due to a new bar being set (lower) for the data in question, and then coming in line with it. For example, tomorrow's jobs data as said above will be bad. No doubt. So how can we ignore it? By pretending that the number could be 40% worse than is currently expected -- the very day before the report. Since this whisper number of 700k came out just this morning and was mentioned on TV, it's now the new benchmark; however, there is no time to investigate who came up with this number and how it was done. How convenient.

So if tomorrow morning's data is released as expected, a little worse, or even 40% worse than the official estimate and the market rallies - now you know why.

Previous Day's Trading Room Results:

Trade Date: 1/8/09

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

1) Engf buy @ 9:15am at 895.75 = -2.25 (1 lot)

2) VA sell @ 9:50am at 903.00 = b/e (1 lot)

3) TP buy @ 10:45am at 897.75 = -.25 (1 lot)

4) FT buy @ 2:05pm at 902.75 = -.25 (1 lot)

5) Algorithm positions (7)...combined daily total...-8.00

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


1) No trades today.



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