Overnight market

by Rossputin | 7:16 am, March 16, 2011 | Comments Off

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.

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