May 28th....Memorial Day weekend markets.....

[ShelladyOptions]

Good morning,

These can be dicey days. Watch out for volatile, thin markets especially at the end of the month. A lot of capital will be thrown around today in the hopes of marking some books for the holiday and month end. Over the years I have come to play these days from the cautious side, only doing what I need to do and not sticking my neck out too far. Corn and beans look to start a little lower as the dollar and oil are largely unchanged.

Equities and gold are also looking to start off very slow as nothing is too far from home at the moment. There will be considerably fewer  traders in today adding to the volatility.

Good luck.

[Jim Meade / Iowa City]

Good morning, Scott.  I hope you have a nice Memorial Day weekend.

What differences do you note in trying to read or get a sense for the market when more and more of the trades are electronic?  Do you think the pit is still an accurate source of the feel for the trade, or do you have to go to outside traders or analysts to get the same feel  you used to get when the pits were the only game around?

when you talk about many traders not coming in today, do you mean not coming in to the pits or not coming in to trade even electronically?  How does the the pit or floor trader affect volatility differently than the electronic trader?

Are there any other differences in the tone or style of trade since more people trade electronically?  I suppose all the big guys trade electronically.  Do most little guys get electronically traded by their introducing broker?

Sorry for all the questions.

[ShelladyOptions]

You are absolutely correct in your question and thinking.

Traders, both electronic and open outcry, are making todays trade very thin. Look at how quickly the equities lose ground and the VIX jumps on not a lot of trade.

The feeling in futures is different than options as the futures are almost 100% electronic and the options are still 90% open out cry.  My gut is based largely on the options traders and a little on the upstairs moods of those who trade futures electronically.

Having said that, Fitch has downgraded Spains rating, China is out of corn and there are rumours of no bean carry out this year. Wierd day. I can understand the Dow Jones but this selling of corn and beans today seems perverse.

[Artifice]

If you run a correlation you will find there is no difference in volatility pre holiday wkend vs other days.

The dominating facrtor is the calendar.

Do we come in TU morn with a further developed crop?

Wheat closer to harvest?

RH

[ShelladyOptions]

It is Tuesday morning and the crop is more fully developed.

The volatility that I refer to is not "historical" or "implied", which are the two main drivers of our market. The way in which I use the word can best be described as schizophrenic. For instance, the days range in corn may be only 3 cents, but if the trades are only at the highs and lows of that days range, that is a herky jerky market. The result of lower market participation can lead to this situation.

Also, sometimes my references are not only to the corn/grain market but the market in general. Unfortunately they are now inexplicably linked.

Scott