I mainly trade Russell 2k and oil futures. Occasionally I'll dabble with small amounts of individual stock futures..
reno, I'd be interested to hear your thoughts tomorrow. It could be a wild day. I was just thinking that if there are no indictments from the special prosecutor that in itself could cause a relief rally.
I doubt the political uncertainty is affecting the markets very much. The charges seem somewhat trivial to me. Since the VIX made a big move up today, I would expect to see more weakness early on Friday. Wouldn't be surprized to see it rally towards the close as the markets are somewhat oversold. But what I think really doesn't matter. It's always better to react to the market than to try and predict it. cheers,
Reno: I have heard this many times here. People saying that they react to market than predict it. I guess I'm just not understanding this too well. Here are four scenarios and please let me know how you'll react to it. 1) The GDP numbers come out better than expected and S&P moves UP 5 pts. 2) The GDP numbers come out better than expected and S&P moves DOWN 5 pts. 3) The GDP numbers come out worse than expected and S&P moves UP 5 pts. 2) The GDP numbers come out worse than expected and S&P moves DOWN 5 pts. How would you react to each scenario. What if the market reverses after you enter a position? I do not react to the market I predict it and enter a position, I'll react only if I'm proved wrong, that is where stop losses come in place. Even though the GDP numbers are better than expected we might see some selling. That is because the market is not too worried about last month's numbers or last quarter's numbers. The market is more interested in next month's numbers and next quarter's guidance.
Just to be clear, I wasn't saying "hey, let's predict the GDP and do a trade based on that prediction." I just think it's a worthwhile topic to shoot the breeze about as it is likely to color the situation for existing positions and positions you're thinking about putting on.
The market tends to react as it wants. If the mkt is bullish, it will view the report as bullish and vice versa. DS
I would not try to analyze the markets reaction to the GDP or try to figure out whether the market was going to reverse or not. I have a defined system that I use for a quick scalp trade when the S&P gaps up or down 4 points or more. If any of those 4 options occur, then the system would be in play. I would use a specific stop loss that is unique to this system. If the market turns hard against me, I get stopped out. It happens. Once I make the scalp and exit the trade, then it's business as usual - observe the charts and wait for your normal trading signals. Sorry if this seems vague, but it's what works for me. cheers,
Fair enough but how's reacting different than predicting. For example, if your system says: Buy at the open if the S&P is down more than 4 pts from last night's close, isn't that predicting that the S&P will move up from that point.
You're right in the fact that all speculation anticipates a price move in your favor. Lets say XYZ company is about to announce earnings. Here's what I don't do - Buy XYZ before the announcement because I think earnings will be good. Here's what I do - After XYZ announces good earnings, I notice it's moving up on good volume. The overall market internals are also good. I buy XYZ. I react to the news instead of predicting it.