Futures appear to be continuing their Friday sell off — which you may have noted closed significantly better than the worst levels of the day.
A few random thoughts on these things:
• Thin: It doesn’t take a lot of cash to push the futures around — the emini SPX contract generates a huge bang for the buck. Looking to manipulate things? Eminis (rather than InTrade) is how the pros do it.
• Misleading: At one point, the post-GOP revolt, Thursday night futures made it appear we were heading to a minus 3% day; instead US markets closed down less than 1%
• Noise: I repeat ad nauseum: 98% of the time, day to day action is meaningless.
• Rookies manning the terminals: During holiday weeks when the big boys are away, even thinner trading allows for markets to get pushed around even further. Thanksgiving and Xmas week are classic examples.
• Witchy: Be aware of days like last Friday that are quadruple witching (futures, stock index options, stock options and single stock futures) all expire at once. Some traders closely watch strike points to see where prices get temporarily pinned (my timeline is long term so I no longer pay attention to that).
That’s all from the sunny, chilly North shore of Long Island — where I will be throttling back, posting less, and enjoying the holidays.
(Yeah, there’s a reads coming later)