Market On Open, Friday 20 June

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All For Themselves, After All

by Alex King, CEO, Cestrian Capital Research, Inc

Market-makers had a wonderful time yesterday. Futures were trading but equities were not. A not-small selloff in S&P500 and Nasdaq-100 futures provided opportunities to both (i) get out of short hedges and also (ii) add to long positions at local lows. This Free Money Zone was not, of course, available to mere mortals who dare not risk becoming Turbo Bankrupt by playing with futures fire.

Zooming out, markets continue to be somewhat directionless in the short term; in the last two weeks, $SPY has moved between $591 and $605, less than a +/-2% move from the midpoint of the range.

Markets don’t trend sideways forever - normally this kind of rangebound sideways price action is indicative of price-setting investors engaging in either accumulation at local lows, or distribution at local highs; soon we will find out which of those it was, I think. The point of the sideways action is to bore the unsuspecting into not expecting the big move that follows. And the job of the investor is simply to be ready for that move, whether it be a break to the upside or a breakdown to the downside.

Let’s get ready by studying where markets stand right now.