Futures vs. Stocks

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It's a little embarrassing to hear media folks on TV and radio asking questions Friday morning like: "Do you think the stock market will open today?"

Wow.

First, it shows how clueless many people in the financial media really are about markets.  But questions like that also help promote the fear factor.

Just reckless.

Many people outside the market simply don't know that the futures markets trade practically 24/7.  That's OK.  But media people involved in the market OUGHT to know that.  When Asia or the European markets are down, you can also track the futures on the Dow Jones or S&P 500.  For most of us, these "futures reports" you might hear in the morning are merely indications of what the market will do when it opens at 9:30 in New York.

On this past Friday morning, I awoke to learn the futures markets were trading "limit down." This means the futures markets had traded down to their daily trading limit and no more futures trading was permitted.

It did NOT imply the stock market would have trouble opening.

In fact, there have been many days (lately) where the futures indicated a dramatic move up or down at 7 am, but when the market opened at 9:30, everything had changed.

Tell you what - I miss the days back in the 1980's, when you knew in the morning if the market would be up today or down today.  Not anymore.

I have lost count of the number of days this year where the market was heading UP but finished DOWN later.  Or vice-versa.  I've also lost count of the number of times the market changed direction multiple times in the same day.

Thomas Mullooly  is the owner of Mullooly Asset Management, LLC, NJ Fee Only Investment Advisor, providing guidance for your 401k account. Mullooly Asset is a fee-only alternative to stockbrokers and financial planners.

Tom's popular email alerts help folks to reduce the risks in their portfolios. To learn how to stop making investing mistakes or if you would like a free look at your 401k account at work - or your 403b annuity, or section 457 deferred compensation plan at work, visit www.mullooly.net today!

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