President's Day

by Larry Levin

Perhaps last Friday's action was so sluggish was due to Monday's holiday - President's Day. We hope you enjoyed the day off. When there is a long weekend on the schedule, the Friday before could be a light trading day. Friday's NYSE volume was the lowest in at least the last 2-weeks, maybe three.

While we enjoy a day off, the rest of the world is trading - and it isn't pretty. The news from Japan has knocked all of Asia and Europe lower. As I type this, the S&P is down over 13.00-points on Globex.

Japan surprised everyone with worse economic news than that of the 1990's: its economy shrank at the quickest pace in 35-years! The worse-than-expected fourth quarter GDP numbers were a sobering reminder of the toll the worst economic downturn in decades is having on Asia's export-driven economies. If the US and Europe aren't buying, Japan is in trouble. The world's second-biggest economy shrank 3.3% from the previous quarter, which is an annual pace of 12.7%!

If that wasn't bad enough, Europe apparently has a few new fears of its own. Investors are fearful that another major player in the UK will be nationalized - Lloyds Banking Group. Add to that more fears about the banking sector in Ireland and the European markets are down as well.

Last Friday, spreads on Ireland's five-year credit default swaps rose to a record 377 basis points. That means it would cost $377,000 a year to insure a notional $10 million of debt against default, which is up from around just $24,000 a year ago. To put it bluntly, global investors now believe Ireland's debt is nearly 16 times more risky than last year because of its banks. This has ignited fears than Ireland could be the next Iceland.


Previous Day's Trading Room Results:

Trade Date: 2/13/09

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


1) Engf buy @ 11:25am at 826.75 = -1.25 (1 lot)

2) Engf sell @ 12:35pm at 827.75 = -1.50 (1 lot)

3) Algorithm positions (2)...combined SofT and Algo total...-4.00


Electronic (YM) Mini-Dow:


1) No trades today



Sign up as an AvidTrader Member to receive "The Technician" Value Area's each day. The market then has an 80% chance of filling the Value Area. Many traders familiar with the Value Area and the techniques that go along with it use it to help them decide what trades to do each day. Join and see how this technique can help you trade more successfully!