Believe me....they all have each others back, many, many times a year. But you always HAVE TO trade both directions regardless of what you FEEL the market may do.....there was plenty of opportunity to get LONG before the end of day run.......... http://www.charthub.com/images/2006/12/01/ES_317_VB_10.png
I think what has spooked US traders since Thanksgiving has been that unless you're plugged in to what drives European markets (Dax, Estoxx50 etc) then you just won't see where the volatility is coming from. Worth noting that Monday was the Eurostoxx50's 5th down day in a row...the previous Friday should have been a quiet day under normal conditions but actually had above average volume and closed at its lows of the day... The Euro breaking out very hard over 1.30 from a VERY compressed congestion area several months long at the same time as the ECB has basically committed to raise rates in Dec and the BOE likewise has meant that exporter heavy European markets had to fall hard because their USD profits would be hit. This had the effect of wrong-footing the US markets on Monday because it all seemed to come out of the blue after Thanksgiving... But actually the weaker dollar coupled with lower interest rates are very positive for US equities which creates the conditions for these volatile swings. Add in monthend and how near the year-end we are (kind of like an increase in market gamma if you think about, ie traders play tighter near bonus time so there are more stops around to move the market) I can't be the only one who thinks this can I? Seem pretty obvious... Just IMHO of course,
Quiet1 - Yes you are right on (that is why I have been taking trades during the EU market hours the last week and a half), and posts like this are missing some of these fundamentals.... ****************************************************************************** EqtTrdr Registered: Oct 2002 Posts: 2842 12-01-06 06:41 PM -------------------------------------------------------------------------------- Quote from VictorS: that falling dollar will eventually hurt the equities markets. -------------------------------------------------------------------------------- wrong..... as dollar falls all asset classes must inflate to keep their same value = home prices and stocks go up up up!! Edit/Delete ⢠Quote ⢠Complain ******************************************************************************* Also the US is filled with multi-national corporations, and dollar/currency fluctuations are not always to their advantage. There have been numerous historical stock market pullbacks in the world caused by higher deviation currency moves......so keep your head on a swivel.
"In a bull market, mutual funds are not going to sell, they will hedge their underlying positions using futures and options. They must be in the market because the alternatives will leave them underperforming if the market rises and redemptions will happen if they are underweighted and underperform on a good year" true. but most mutual funds aren't gonna sell, and CAN"T sell - PERIOD - any more than their respective redemptions. why? cause it's in their charter. most MF's have to stay nearly fully invested, and most mutual funds can't short either. this, of course, is in the long smart, since in the long run, the markets build wealth. but most mutual funds cannot go 20% (let alone 50%) cash. they HAVE to be fully invested. as a futures index trader, i am well aware that mutual funds and institutions are behind much of the trading, and that's fine with me. part of trading is learning how to recognize their footprints. mutual funds and institutions also want to beat VWAP and they tend to (as i said) buy weakness and sell strength. also, many institutions buy to offset other positions, etc. and their purchases may be balanced by cash market positions etc. regardless, this idea of manipulation is absurd. look, ONE thing moves the market higher - when buy orders lift offers, the market HAS to go up. it's called demand exceeding supply. it is not rocket science. the CBOT book, for instance, doesn't know WHO is buying (GSCO or johnny smith), it's just an order in a bookm and nobody gets special treatment. obviously, the pit is a bit different, and i have found utility in listening to the pit audio feed to find out what the big boys are doing. but again, people who are whinging about "manipulation" are almost always losing (or missing out) traders, who can't admit they were wrong in their position, or hesitant to take one, and missed a hyooge move. hey, i'm the first to admit i did not catch the vast majority of that late day move. i got stopped out in a short for -10, then got long and won about 6, 9, and 16 points long. hey, that's trading. then, i scalped another 6 points long in the middle of the move. did i bank? hell no. was it because of "manipualtion?" SPARE ME! a short term trader doesn't care WHY, he should care WHAT. a longer term trader/investor can enhance his edge by analysis of fundies, and the why's but when intraday trading, it does nto MATTER why there is a buying frenzy - just that he needs to get in and capitalize, preferably BEFORE the buying commences with any vigor. any trader who attributes these moves to "manipulation" is a whinger who simply cannot go with the market. don't embrace your opinion, embrace the market
ACM Trader, Great comments. For me....manipulation of the market....is a positive thing. Rather than getting caught up in who or what is manipulating the market....a trader has to learn how to take advantage of what is going on. Do I think the markets are manipulated....yes....but that is the beauty of the Market. It's big money....it's small money....that's the game we play. There will always be winners and losers....it's how we play the game....which either makes a trader a winner or a loser. Yes....in my opinion....big money....does manipulate the market....and I am very happy they do. All I had to do....was learn how to be on....Their team....not go against them. Trading is all about making good or bad decisions. My trading....is based on Discipline....which is based on a set of Strict Trading Rules. I won't go into that here....have showed several examples in other threads. The point is....the more manipulation....the more volatility....the more I like it. VSTscalper
1) The crash of 1929. There is nothing unique about the crash of '29. It is something that happens every 20 to 30 years, because that is the length of the financial memory. It is about the length of time needed for a new set of suckers to come in and imagine they have a new and wonderful fix on the future." From: Jesse Livermore, World's greatest stock trader. 2) If you are not sure about this manipulation then you have still a lot of learning to do, in other words: you are still a newbie. 3) Those who can keep their wits and rational in a panic are uncommon. Maria
do you have an article to link to about this? or are you referring to mccurto's anecdote about GS selling tons of 113 straddles on another thread?