Overnight market
I haven’t figured out why yet, but overnight there was a rally in every commodity that I watch. Oil went from down $1 to up $1.50. Gold went from flat to up $11. Silver went from down 10 cents to up 55 cents. Wheat and soybeans are also up.
One news story suggests the turn in oil is due to unrest in Bahrain and Libya but I’m skeptical because that doesn’t explain the other commodities in any way.
The US Dollar is mixed, so that’s not it.
The S&P futures and Nikkei futures are up very slightly (about 1% in Japan, and just a fraction of a % here) from 10 PM last night, so that’s not it.
My best guess is that people are focusing on the Fed’s report yesterday: the economy is strengthening (very modestly) and they’re probably not going to raise rates anytime soon because they don’t see inflation. Also, they almost certainly will NOT extend QEII beyond its scheduled size and duration. Putting all that together, it could explain strong commodities and fairly flat stocks. Of course, markets are going to remain volatile so it wouldn’t surprise me if anything or everything ends the day nowhere near where they’re starting.
Anyway, I hope it’s a quiet morning because I have to take my son to school while the market is open! I sold some out of the money S&P puts and calls yesterday. Rather risky play but the volatility struck me as very high and I didn’t sell very many. At the moment, it looks like a decent morning for my position.
| Print article | This entry was posted by Rossputin on 03/16/11 at 07:16:00 am . Follow any responses to this post through RSS 2.0. |
Yours truly
-
Following Obama's Economic Policies
Facebook NetworkedBlogs
XML Feeds
03/16/11 @ 07:53:56 am
Ross, I suspect it's diminished worry over the situation in Japan, and how the totality of the events over there will affect the world economy. As you said, certain industries will reap huge profits from this, although the overall effect will be a poorer Japan.
Also, as more and more people begin to understand that a classic "meltdown" almost assuredly cannot occur, the weight of a nuclear catastrophe starts to lift from the world's psyche.
Just my opinion...
03/16/11 @ 07:59:12 am
Greg,
I agree with much of your analysis except that if it were just about reducing fear of a meltdown, the stock markets in both countries would probably be doing a little better.