Dull Futuremarkets & Their Opportunities

Many people are apt to regard dull futuremarkets as a problem for trading purposes. They claim: "Our hands are tied; we can't get out of what we've got; if we could there'd be no use getting in again, for whatever we do we can't make a dollar in the futuremarkets".

Such people are not tape readers. They are Sitters. As a matter of fact, dull futuremarkets offer innumerable opportunities and we have only to dig beneath the crust of prejudice to find them. Dullness in the futuremarkets or in any special future means that the forces capable of influencing it in either an upward or a downward direction have temporarily come to a balance. The best illustration is that of a clock that is about run down - its pendulum gradually decreases the width of its swings until it comes to a complete standstill, like this:

Turn this diagram sideways and you see what the chart of a future or the futuremarkets look like when it reaches the point of dullness:

These dull periods often occur after a season of delirious activity on the bull side. People make money, pyramid on their profits and glut themselves with stocks at the top. As every one is loaded up, there is comparatively no one left to buy, and the break in the futuremarkets, which inevitably follows, would happen if there were no bears, no bad news or anything else to force a decline. So with these intervals of futuremarkets rest, traders who have placed themselves in a position to be trimmed are duly trimmed.

They lose their money and temporarily, their nerve. The futuremarkets, therefore, becomes neglected. Extreme dullness sets in. If the history of the futuremarkets were to be written, these periods of lifelessness should mark the close of each chapter. The reason is: The factors that were active in producing the main movement, with its start, its climax and its collapse, have spent their force. Prices, therefore, settle into a groove, where they remain sometimes for weeks or until affected by some other powerful influence.

When the futuremarkets are in the midst of a big move, no one can tell how long or how far it will run. But when prices are stationary, we know that from this point there will be a pronounced swing in one direction or another. There are ways of anticipating the direction of this swing. One is by noting the technical strength or weakness of the futuremarkets.

When dull futuremarkets show their inability to hold rallies, or when it does not respond to bullish news, it is technically weak, and unless something comes along to change the situation, the next swing will be downward.

On the other hand, when there is a gradual hardening in prices; when bear raids fail to dislodge considerable quantities of future; when stocks do not decline upon unfavorable news, we may look for advancing futuremarkets in the near future.