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21 April 2005 pre-market comment

Yesterday, after the 10:30 ET EIA Petroleum Status Report I noticed something interesting. Oil and the equity indices appeared to have uncoupled themselves and seemed to be trading a bit more independently before the report came out. After the report came out I noticed that the equity indices and the price of oil became highly negatively correlated for the rest of the day and each up tick in the oil price was met with a down tick in the equity indices.

This could have just been my imagination and I haven't done any mathematically measurements to confirm this so take this statement as you will. If you wish to investigate this further then I suggest that you take 1,3, or 5 minute charts of oil and your favorite equity future and compare the price movements before 10:30 ET yesterday (including the previous day) and the price movements after and see if you notice an increase in negative correlation.

If you do have anything interesting to report on this then feel free to comment here.

I have moved the Daily Notes page around a little bit. If you're using Firefox as your browser you will probably need to refresh (F5) the page a couple of times before the formatting lines up neatly. I'm not sure why Firefox requires this refresh to be done. If anybody knows then let us know here - or let me know how I can prepare the page so you don't have to do that.

Equity futures generally make new lows for the year yesterday while bonds close near their 40 day highs and oil is in the middle of its 40 day range. If you take a quick glance at the Daily Notes page you will see that I have highlighted in yellow the figures that show unusually high values. This is done automatically and allows me at a glance to see what's up in the whole market place generally. Lots of yellow squares across the page tells me that the market has become more volatile and we're seeing bigger price moves in general.

As a day trader this is fantastic news because the opportunities to make money increase. There is nothing worse for a day trader than dull narrow range markets. Of course, if you're writing options then you don't want to see this. Option writers want to see a non moving market eroding the time value of the options that they have written.

Have a good trading day everyone!