Very sorry to open a new thread, but i am not able to fully comprehend what happened today at 3pm by reading the news or other threads. well, I didn't have any position today luckily cuz i had trouble with my bank and i went out, anyway....when i came back and i looked at the charts, i was shocked - i had the whole direction wrong and i would have probably taken a huge loss if i was trading. can someone please let me know what happened...i i just want to know if there was any warning before 3pm that the market would go up. And for the people who didn't lose money or rather made a lot of money, how did you know what was going to happen? did u just react or was it your analysis or the news? thank you for your time!
I sure somebody else can try to rationalize but I just wanted to note something. The markets not only shot up but reversed a ton of momentum down (about 20 points on the NAS in 10 minutes) and then basically reversed up and rallied 50 points in 45 minutes. I was short so I was paying close attention! Strange thing was that the first three bars on the reversal had half the volume of the drop. I'd say we rallied because nobody wanted to keep selling. All the pundits and CNBCers are talking about this great reversal and the volume. Yes, it looks impressive but I'm not biting. Maybe we rally for a couple of days but I wouldn't be surprised to see us sell off into the close tomorrow. Who the heck wants to be long going into the weekend?
Most probably due to options expiration, given the huge open interest on SPX puts. Somehow I dont think the momentum will carry over onto Friday, most ppl arent buying this bullshit reversal.
The reversal was due to shorts covering. We will see another round of shorts tomorrow morning. There is no other explanation for the turnaround today.
Good observations. I was involved also. I NEVER trade ER2 but it's strength around an hour or so before the close caught my notice. They looked like they'd get higher. This was around the time when ES was above 1400. Then the bottom fell out. I was down about 8 handles on my ER2 and I remember that I sold the last 3 ES I had at 99 and in minutes they were trading 80. ER2 though would come back 3-4 pts effortlessly off it's swing lows during this period. I looked to the ES tape for clues and one could almost feel how the record day volume just sort of dried up as the market rotated off the lows. You're so right. The sellers were facilitated and finished.
"The DJIA and carry trades rebounded from huge losses today, based in part on two rumors: An emergency rate cut and a big investor for Bear Sterns. The bad news was plentiful: Moddy's downgraded Country Wide's debt to BBB+, three steps below their worst rating and they had to tap their last life-line in obtaining credit. Unemployment claims shot up and housing starts are the worst in a decade. The Philly Fed went to 0. Besides that, Dell is going to re-state their earnings down. But the grandaddy of bad news came as Moody's warned of a Hedge Fund implosion that would rival LTCM."
What a bunch of blah blah. Market bounced because of the following: Option expiration short covering oversold in the short-term (gotta bounce sometime) All redemptions were due today, So the big guys new where they stood on out going funds. People should really stop with these conspiracy theories of B.S. Do your homework!
Instead of focusing on why, why not focus on what type of signal would have gotten you in and out of a trade without needing to be a psychic. Obviously, no one would need to trade if they had absolute knowledge of the future. Here is a link to the old turtle system. Worth reading and may inspire more research into system or rules based trading. Most people lose due to lack of any sytematic approach to the markets which makes it about as reliable as horse racing or the roulette wheel. http://freeforexebooks.com/Other/turtlerules.pdf