Reason why market just tanked

As I mentioned yesterday on a brand new thread entitled, "Bull Market Correction" . . . the SPX had major fibonacci support at 1087

Today's intra-day low for the SPX: 1087.16

http://www.elitetrader.com/vb/showthread.php?s=&threadid=30121

 

So much for using technical tools like fibonacci retracements, eh Trend Fader?

 

nice work

 

I agree....news moves markets. But that doesnt neccesarily mean you need to evacuate ur system..as a poster pointed out..the distortion may in fact be a wet dream in disguise...AKA..anthrax letters...

 

Rumors and news of this type do have a market impact - but the impact is typically to exacerbate the underlying trend. But some rumors are taken off the shelf and used over and over to push the market this way or that. The "Saddam", now "Bin Laden Capture" rumor is one example of this. I can't recall how many times Bin Laden has already been captured by false news reports used to move the market.

I think this is what Cheese and sulong are talking about - because these news stories tend to revert back to the mean - like today's movement, for example.

News that is of a truly "surprise" nature and that is significant to the market fundamentals (like a surprise rate move) will change the trend direction for more than just a few minutes or hours, but these news reports are extremely rare.

 

What really moves is not even so important as the fact to be able to stay in the market flow regardless of outer influences & to stay in flow with your usual setups...but as timely newsfeed with good, customized alerts can pay for itself during the trading year & is sometimes the "cream of the crop"

good trades,
cosmic

 

news stories tend to revert back to the mean

Thanks TriPack,
This is exactly what I was trying to relate to. ( in my own fumbling way)

 

exactly: just another shortterm cycle

ready to be exploited

best,
cosmic

 

Lets get real over hear... they tend to revert to the mean after the fact. In real time trading that is very dangerous type trading.

In my history of trading I can remember countless times when the news moved the markets so much it screwed up intraday charts and the market never reverted back to its mean for days... and sometimes longer than that.

A very dangerous method is to fade news reports.. because u never really know if they are serious or bullshit.. I agree 90% of the time they are pure bullshit like that russian nuke sub blowing up... but the one time that its legit u can get crushed.


--MIKE

 

90% is very good odds, don't ya think?

Here's a chart about the time this conversation started.

What is so different about the price action around your news time?