My prediction: DOW -500 tomorrow Tuesday Jan 22, 08….

[davelj]

asianautica,

Let me explain. The “open” value – 12,130 – was the first open for Dow futures trading AFTER futures trading closed in the US markets on Friday afternoon. So that “open” value that you’re seeing on Bloomberg was the open for Dow futures in Asia on Monday morning (or Sunday our time). (Remember, we haven’t traded Dow futures here in the U.S. since Friday, but they still trade them in the rest of the world.) The 11,601 value reflects the CURRENT trading price for Dow futures. The -505 is the expected decline in the SPOT Dow value when the market opens in the U.S. tomorrow morning. (Remember, you can’t have a SPOT index value until the index actually trades, which it will tomorrow morning.) Does that make sense?

[an]

Ah, OK. Thanks for explaining. That makes more sense now. So does that mean we’ll gap down tomorrow, or drift down? If we gap down, is there still a possibility to drift up to positive territory by day close?

[an]

Ah, OK. Thanks for explaining. That makes more sense now. So does that mean we’ll gap down tomorrow, or drift down? If we gap down, is there still a possibility to drift up to positive territory by day close?

[an]

Ah, OK. Thanks for explaining. That makes more sense now. So does that mean we’ll gap down tomorrow, or drift down? If we gap down, is there still a possibility to drift up to positive territory by day close?

[an]

Ah, OK. Thanks for explaining. That makes more sense now. So does that mean we’ll gap down tomorrow, or drift down? If we gap down, is there still a possibility to drift up to positive territory by day close?

[an]

Ah, OK. Thanks for explaining. That makes more sense now. So does that mean we’ll gap down tomorrow, or drift down? If we gap down, is there still a possibility to drift up to positive territory by day close?

[davelj]

Absent any new “news” – like news of a preemptive rate cut – the market will likely gap down to reflect the futures trading. Two things to remember: (1) Every hedge fund of any importance trades in the global markets, so most U.S. hedge funds are already trading the Dow futures in the foreign markets that are open right now; the current Dow futures price already reflects what the marginal U.S. stock trader thinks is going to happen tomorrow; (2) There’s arbitrage at work here. If the Dow futures are trading at “X-5” and the actual Dow Index is trading at “X” the arbs are going to sell the actual Dow Index (with the higher value) and buy the Dow index futures (with the lower value) to capture a risk-free profit. But the market participants already know traders will try to do this at the opening and the current price reflects that – there won’t be a free lunch for anyone. Therefore, absent any new news, the market will likely gap down. Where it closes, who knows?

[davelj]

Absent any new “news” – like news of a preemptive rate cut – the market will likely gap down to reflect the futures trading. Two things to remember: (1) Every hedge fund of any importance trades in the global markets, so most U.S. hedge funds are already trading the Dow futures in the foreign markets that are open right now; the current Dow futures price already reflects what the marginal U.S. stock trader thinks is going to happen tomorrow; (2) There’s arbitrage at work here. If the Dow futures are trading at “X-5” and the actual Dow Index is trading at “X” the arbs are going to sell the actual Dow Index (with the higher value) and buy the Dow index futures (with the lower value) to capture a risk-free profit. But the market participants already know traders will try to do this at the opening and the current price reflects that – there won’t be a free lunch for anyone. Therefore, absent any new news, the market will likely gap down. Where it closes, who knows?

[davelj]

Absent any new “news” – like news of a preemptive rate cut – the market will likely gap down to reflect the futures trading. Two things to remember: (1) Every hedge fund of any importance trades in the global markets, so most U.S. hedge funds are already trading the Dow futures in the foreign markets that are open right now; the current Dow futures price already reflects what the marginal U.S. stock trader thinks is going to happen tomorrow; (2) There’s arbitrage at work here. If the Dow futures are trading at “X-5” and the actual Dow Index is trading at “X” the arbs are going to sell the actual Dow Index (with the higher value) and buy the Dow index futures (with the lower value) to capture a risk-free profit. But the market participants already know traders will try to do this at the opening and the current price reflects that – there won’t be a free lunch for anyone. Therefore, absent any new news, the market will likely gap down. Where it closes, who knows?

[davelj]

Absent any new “news” – like news of a preemptive rate cut – the market will likely gap down to reflect the futures trading. Two things to remember: (1) Every hedge fund of any importance trades in the global markets, so most U.S. hedge funds are already trading the Dow futures in the foreign markets that are open right now; the current Dow futures price already reflects what the marginal U.S. stock trader thinks is going to happen tomorrow; (2) There’s arbitrage at work here. If the Dow futures are trading at “X-5” and the actual Dow Index is trading at “X” the arbs are going to sell the actual Dow Index (with the higher value) and buy the Dow index futures (with the lower value) to capture a risk-free profit. But the market participants already know traders will try to do this at the opening and the current price reflects that – there won’t be a free lunch for anyone. Therefore, absent any new news, the market will likely gap down. Where it closes, who knows?

[davelj]

Absent any new “news” – like news of a preemptive rate cut – the market will likely gap down to reflect the futures trading. Two things to remember: (1) Every hedge fund of any importance trades in the global markets, so most U.S. hedge funds are already trading the Dow futures in the foreign markets that are open right now; the current Dow futures price already reflects what the marginal U.S. stock trader thinks is going to happen tomorrow; (2) There’s arbitrage at work here. If the Dow futures are trading at “X-5” and the actual Dow Index is trading at “X” the arbs are going to sell the actual Dow Index (with the higher value) and buy the Dow index futures (with the lower value) to capture a risk-free profit. But the market participants already know traders will try to do this at the opening and the current price reflects that – there won’t be a free lunch for anyone. Therefore, absent any new news, the market will likely gap down. Where it closes, who knows?

[an]

very interesting info davelj. Thanks for the write up. We’ll just have to wait and see if there is any news or not. There’s supposed to be several earning report tomorrow too. If they all turn out better than expected, the market will fill in the gap. We’ll just have to wait and see I guess.

[an]

very interesting info davelj. Thanks for the write up. We’ll just have to wait and see if there is any news or not. There’s supposed to be several earning report tomorrow too. If they all turn out better than expected, the market will fill in the gap. We’ll just have to wait and see I guess.

[an]

very interesting info davelj. Thanks for the write up. We’ll just have to wait and see if there is any news or not. There’s supposed to be several earning report tomorrow too. If they all turn out better than expected, the market will fill in the gap. We’ll just have to wait and see I guess.

[an]

very interesting info davelj. Thanks for the write up. We’ll just have to wait and see if there is any news or not. There’s supposed to be several earning report tomorrow too. If they all turn out better than expected, the market will fill in the gap. We’ll just have to wait and see I guess.

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