DJ Stk Futures Seen Up Next Session In Show Of Patriotism
I guess the patriotic thing to do is let them get it up as high as they feel necessary to demonstrate their Patriotism and then short it. In fact, if they demonstrate any real resolve to pump things up I don't have a problem going long before short
CHICAGO (Dow Jones)--When stock index futures open for trading Monday, the contracts are expected to keep losses contained despite earlier fears of the contracts being dragged down after Tuesday's terrorists attacks.
Experts and traders even said that a rally out of patriotism is not out of the question.
"We may have a flag rally," one such floor trader said, adding, "But there won't be panic selling."
The trader reasoned, "Overseas markets came back good, and bonds are not as much up as they could be."
Also, David Hightower, editor of the stock newsletter Hightower Report in Chicago, believes that the U.S. Federal Reserve may try to perk up liquidity at the next stock futures trading session - a move carried out in the aftermath of the October 1987's stock market crash, he said.
And along with expectations of substantial interest rate cuts, Hightower said any initial selloff should be mitigated by buying later.
Hightower said the September Standard & Poor's 500 stock index contract is likely to hold strong support above 1082, 1067 and 1066.
The September S&Ps last closed at 1095.70 Monday.
Meanwhile, the contract could face resistance at 1125, a level where open interest has been strong in the past, Hightower said. A move above that level could take the contract higher on short covering, he added.
Not all investors are as optimistic, however.
One floor-based trader at the Chicago Mercantile Exchange said that behind the CME's expected decision to delay opening stock futures past Friday, is "the psychology that we don't want anyone to know how bad things are, even if we know bad they are."
The Chicago Board of Trade and the CME said Thursday they will re-open trading in stock index futures Monday.
The trader said he is expecting September S&Ps, the most heavily traded of stock index futures, to dive 3% at the next trading session.
But at a time when reality seems to be imitating fiction, some stock index futures experts believe Tom Clancy couldn't have seen it better.
"I wouldn't lock up the possibly that we open higher," said Hightower, invoking Clancy, who depicted such a scenario in his novel in which a terrorist plane crashes into the Pentagon.
"We may have a John Wayne rally...against the tide, bold," said Hightower.
There is even talk of a so-called gentleman's agreement not to short stocks when trading in New York resumes Monday. In fact, some sources have said short-covering will be a dominant theme Monday morning.
Most traders Thursday were expecting stock futures markets to remain closed Friday.
"The longer they delay the opening is probably a good thing," said one floor trader, who said the weekend will allow investor anxiety to dissipate slightly.
Despite the closed stock futures and options session, some traders at the CME showed up Thursday. Some sat around aisles circling the empty trading pits, others scurried between trading floors, putting bets in currencies and interest rate futures markets. Most carried small American flags in their jackets' front pockets.
"People would want to help the government at this time," said one floor-based trader, who sees the market starting shaky, but ending stronger at the next session. |
