On the NYMEX where 90% of the trading is in spreads, the locals look at historical relationships that are displayed visually via charts and more often than not will also apply technical analysis to those charts. Even the quickest of "scalpers" on the CBOT or CME will take a look at where various moving averages are coming thru, support/resistance levels, not too mention a fibonacci calculation or two. In other words: TECHNICALS
I may join you selling near October highs...I'm talking about the 1 to 3-day rallies and clear resistance points that have been shorted so far. Those are getting a little too obvious and "easy" in my book. If something big happens (surprise Fed cut or tax cut, major soverign fund buyout, whatever) we could see a huge run on stops at 50-day MA, 200-day MA, trendline resistance, etc. Just like it happened in late August and September.
OK - so I sit down every morning at 8am and write some notes about the upcoming trading day. (Got the idea from a poster on ET) Here are my notes from this morning - (so maybe this whole 'support/resistance' concept is a matter of belief?) Franklin, Dewey and Peirce had some interesting things to say about belief
October highs? We might not get back there for another 2 or 3 years! I'm serious. This is a totally broken market, lots of financial problems in the US that will not be cleared out in 6 months. It will take a few years for things to get back to normal.
You don't think Goldman was out there buying today before the big closing rally after it made its recession call? Goldman is one of the easiest fades. They say one thing and their traders are doing the opposite. Its all about green for Goldman, they have no ethics. Goldman was short subprime and selling the slime to its clients at the same time. Wow, that rhymes. haha.
The market IS manipulated, it doesnt take much to manipulate it on an intra day basis, but its obviously impossible to manipulate it for any extended period of time.
If you try to pinpoint the reason as to why things happen you will alway lose. Nobody knows and nobody ever will. This technical bounce was one of the most predictable ones I have ever seen. If you did not make money today you will never make any unless you stop thinking about reasons and causes and start studying the charts. Good luck Alex
Trading is a zero sum game. Stock investing is NOT a zero-sum game because of dividents, mergers, value creation, etc. Futures trading is zero sum by definition and structure. Yet, futures prices move in trends often. Zero-sum has nothing to do with pricing of assets. It only has to do with loses and winnings and they must be equal. Alex