1. Mkt is ST extended... perhaps dip back to fill Friday's gap? 2. "Sunday night red" usually doesn't mean much. It all depends on what Europe does. They are "monkey see, monkey do" for our moves, but we are the same on their's, most of the time.
It could be many things but I think the terrorist bombing of a club in Bali is throwing a lot of fear into the market. A lot of Australians were hurt and their PM was very very pissed off. Sounds like another country is on side for the war against terrorism.
If you look at the big picture, we keep slamming deeper into the red, followed by occasional rallies that bring up back up some. In my opinion, we definitely haven't see the bottom. This market still have plenty of weakness and confusion built into it. Looking at the charts, I think the rally we experienced the past two days was basically a lot of snowballing short covering. We're probably going to stall here or go down again -- eventually taking out new lows. The DOW won't see the bottom until it runs into the 6000's. ES will most likely flirt with the 600's. At this point, volatility will hit a new high, option premiums will be huge and it will be a great time to sell a lot of high-premium puts and purchase some bargain calls. Look at it like this -- Anyone who purchases calls on any stocks on Thursday morning (like IBM) would have seen a nice 1000% gain on a slightly-OTM call. This is going to happen again. If you look at it from a contrarian point of view, the best opportunities in the market are when it is sky-high or a wounded, bleeding animal. Monday may see some selling into the previous two rallys -- especially after the terrorism events. Plus, people in my area are all panic stricken by the sniper and there is a dark cloud of gloom over Maryland.
I was long a ton of stuff going into Friday morn and I was convinced the market was going to pull back hard some time on Friday so about noon I sold about half of my long positions. The real problem was that I was selling the es at every new rally and got slapped pretty bad. I finally banked some of that great pullback but went short about half way back up and gave it all back. I really underestimated the strength of the buying. The trend was shouting BUY BUY BUY but I kept selling. Lucky I kept some longs. I want to do some more bottom shopping.: confused: Nas
Nas, You're not alone. Anyone that claims to have this market figured out, is only fooling themselves.
I find it much easier to trade day to day, overnite positions based on a nice chart always seem to run into news, earnings, analyst comments(though I cant believe anyone would listen to any of these people). Lifew has become very simple just daytrading nice range stocks and going home flat.
I don't know, man. I see the benefits of not being exposed overnight. But if you are correct often enough, the moves there are REALLY nice. Besides, I only have to step in towards the end of the day and close out in the morning - that leaves me the whole day to do whatever else I have in life. I usually don't have to sit there glued to the screen and stare at it the whole day. As for the news/analysits comments etc - in a few cases that are possible to isolate with enough rigorous analysis, you can predict that only the comments you expect will be made. Then again, I only trade overnight and thus my opinion is biased
If you are really afraid of being caught with your pants down overnight and have a "really good hunch" that the market is going to go a certain way, you could always purchase options on whatever your flavor is and limit your risk to 100% of your option price. The total market cap as a percentage of the US GDP is still 108% -- the historical average is 58%. The high (during the bubble) was running around 185%.