No Vol

by Larry Levin

What a difference a day makes. Last Friday we experienced a large increase in volatility, both bullish and bearish changing thru ought the day. Today? Not so much. The market reversed from big vol to no vol. Today's range for most of the day was just 6.00-points and ended up being a still slender 10-point range by the close.

There were no economic reports to believe or ignore. The only thing that happened was a speech given to the Economic Club of Washington, D.C. by Fed Chairman Ben Bernanke. It failed to move the markets.

Only late in the day was the market moved by something: the US dollar. The 18-month long inverse relationship to equities took a powder Friday, magically not affecting stocks as the US dollar sharply rallied, but came back late this afternoon. Once the dollar started another intra-day sharp rally northward, the S&P500 dropped to a new low, thus extending the aforementioned 6.00-point range.

Jim Reid, a strategist at Deutsche Bank, had this to say about it, "The very strong inverse relationship over the past 18 months between the dollar and risk assets will be the most interesting thing to watch in 2010 if the greenback finally bottoms. It's still a big 'if' but Friday was fascinating in that the market ended higher after the dollar rally but only via some extreme intra-day moves across different assets."

Mr. Reid is correct. Watch the US dollar moves; it is a great indicator at the moment.



Previous Day's Trading Room Results:

Trade Date: 12/7/09

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


1) No "Secrets" trades were filled today.

2) Algorithm positions (7)

3) "Reading the Tape" positions (10) ...combined Secret's, Algo, & "Reading the Tape" total...+4.00



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