The mystery of European Dow futures trading

Friday, April 29, 2005

Before I will sum up today's economic releases - which continued to show more bumps on the dire economic straits lying ahead of us as I had predicted correctly in this post - in a second post, I want to throw in this short piece about "The mystery of European Dow futures trading".
As my daily observations start at least six hours earlier than those of investors living in the new world, I am baffled almost every morning by the behaviour of the Dow future in early European trading.
It has become a regularity for the Dow future to trade anywhere between 30 to 60 points higher than its closing level of the preceding day, no matter what the expectations are. And in early European morning trading there are no other guidelines for the markets of the old world than the closing levels of the world's biggest capital markets on the other side of the Atlantic ocean.
Today's action was a particular good example as the Dow closed at its daily low on Thursday. From a chartists perspective this should warrant not more than a steady, if not lower, level of trading. (I am limiting my observations here to the Dow future, but the other index futures follow suit most times.) Despite the unsure expectations for today's developments on Wall Street in light of the massive amount of important economic data, CNBC's squawkers were visibly delighted to be able to point to the positive course the index futures were taking in Europe. If I only would be able to be soooo optimistic about the longterm outlook for shares, I'd be busy buying equities all day long. Question remaining here: For how many days?
But let me turn back to the original issue. Instead of coming up with a lot of suspicions that would all end with the thought of market manipulation, I hope to get lots of comments for these pricing patterns I am observing.
Is there anybody out there in the blogosphere who can soothe my fears that there might be some market manipulation which I conclude from the fact that volumes in European trading are only a fraction of those mountains of money being bet everyday in the states? Or are my anecdotal observations really are only the result of my proneness to see bad forces at work whereever the words profit and loss are involved. Either way: May I repeat my invitation for comments on this issue!

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