Our BLOG operates via mathematically-generated signals, not news events. Over time, it is my conclusion that most speeches of significance get reflected into the market within hours, or even days before they occur. Normal trends and directions resume shortly thereafter, based upon the fundamental economic situation.
We'll stick with our algorithms as our methodology. However, it is significant to take note of how Obama's speech reflected into the Globex Markets.
1) Obama set forth many challenges to Congress, saying that he would sign certain legislation immediately if it were sent to him for signature. Some of the ideas were brand new, and others were programs proposed within the past four years. Either way, most of the speech reflected new spending without ways to pay for that spending. This would ultimately result in more National Debt, and potentially a lower credit rating for the US. Result: the next day the foreign currencies rose sharply. In addition, gold rose $50 per ounce. Gold is often regarded by some as an "alternative currency."
2) Obama talked about a new emphasis on "clean US energy." This I applaud, as I always have. Result: the next day Natural Gas futures were up over 6%.
3) Apart from the "State of the Union," Gingrich talked about his desire to end sugar subsidies, something I favor as well. The next day our long sugar position took a hit. However, a day later it is recovering.
Our positions and stops will be set forth in a BLOG that will come out hopefully later today.
Have a great day!
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