After the Run-up

Posted: Oct 08, 2011 12:01 AM

Folks, in today’s session, the markets traded mixed. This comes after a run-up of around 80 handles in the S&P over the last three days that has helped to restore a little confidence. So, too, did a better-than-expected jobs number this morning—nothing to jump up and down about, but considering the obstacles to job creation coming out of my fellow Chicagoan’s administration, it’s not bad.

For those of you who have been following my guidelines with your hedges, now that we’ve seen this move in the S&P it’s time to roll your position back up. Just like you rolled down your protection and took money off the table when we saw that big break—taking advantage of the volatility and what I call that explosion spread—now is the time to roll it up. Active management of your hedge is the key.


Jim Iuorio, managing director of TJM Institutional Services, came by the studio to co-host the show this morning. Any of you who watch CNBC in the mornings will know who Jim is—he’s the good-looking guy who wears a trading jacket with a distinctive sky-blue lapel. Jim comes from the institutional side of things, and among his many clients are 10 of the biggest banks in the world. So when he talks, I tend to listen pretty closely.

As far as equities are concerned, Jim says he’s cautiously bullish going forward. As the Fed continues to print up new money to throw at the problem—money that goes right into the 10-year, driving yields down—risk assets will be the only place investors will be able to find a decent return. By the end of the year, he’s looking for an S&P that’s well into the 1200s. He’s also quick to point out that there are some time bombs in Europe that could go off, and one big headline could change everything.

It stands to reason, then, that Jim’s somewhat bearish the 10-year. He mentioned, however, that he thinks it traded down a little too fast lately, and that we could see a bit of a bounce. That’s why he is taking this opportunity to reset some shorts—he understands that markets don’t move in a straight line. Smart guy, that Jim.


As he is each and every week for Futures Friday, Howard Marella, president of Index Futures Group, was also a guest on today’s show. He reminded us that the World Agriculture Supply and Demand Estimate comes out on October 12. Howard feels a potential bottom in corn that could follow in step. Anyone who’s bullish on corn might want to get in a position ahead of time. If we do wind up seeing the move Howard expects, there might not be time to jump on once it starts.
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