I would not argue that the market was nervous this am, nor that the news caused a move down. I would argue however that the market "tanked". The action around the news wasn't much different than it had been since the open. I did not see any 50pt Dow drop (or anything close to that) in a matter of seconds. Can you post a chart that shows this.
Yes and the 10% were made for stop losses. By using good risk management the 90% more than make up for the 10%.
News is important to financial markets, it can instantly change the outlook of many speculators thereby instantly creating a load of volatility. The key to playing news is understanding that it will ALWAYS move the market along the line of least resistence, wherever it is at the time. When saddam was captured, the market was not yet ready for a major rally day, only 2 days later did the line of least resistence turn up. If yassin was assassinated in the middle of december, I doubt you would have seen much of a move downward, if not a strong rally. If the world trade center was attacked during a strong bull market (1997 maybe?), think about what would have most likely happened. A large down day perhaps? That's about it, it's all taken in perspective.
It's a funny use of terminology when someone says that the market "tanked". Does that mean that there was a tremendous amount of selling? Or does it mean that traders and institutions simply "pulled" their bids and an air-pocket occured?
I think the common assumption of causality between news and market movements is largely unjustified. Major shock events of the size of 9.11 or the event of war will have an impact on markets, but I think mostly the market does what it is going to do and clueless financial reporters attribute the movements to unrelated news items because they get paid to make up stuff to fill air time. When the markets gets greatly overbought we can expect: a) the market will sell off b) some item in the news will be attributed as the cause. When the market gets greatly oversold we can expect: a) the market will go up. b) some item in the news will be attributed as the cause. I think it is more useful to view news as an catalyst or an excuse then the cause of market movements.
This is the forecast of the model from yesterday for today: theorically the consolidation target was 10089.4 and the bearish target at time unit 1 (day) was 10005.3. Previous day's close was already below 10089.4 so the bias for opening was bearish. Nevertheless it must be confirmed by opening. Opening was still below so it was a confirmation. At what time exactly the news was broadcasted ? It was only a rumor ? Technically it doesn't change anything. If that kind of rumor tend to coïncide with technicals whereas it should be uncorrelated since it is "unexpected" ... then there can be suspicion that the rumors are fabricated on purpose. But for studying this one must gather all these kind of rumors to make a statistical study. <IMG SRC=http://www.elitetrader.com/vb/attachment.php?s=&postid=459766>
News effected MY market. Last time "rumor" was published in the news about ECB president Trichet possibly raising EU interest rates / combined with rumor about the USA doing better, the market (EUR/USD) tanked 800 points on the dot. It recovered about 3 cents. This time the same rumor is circulating, effect - 200 points vertical tank. Another reason why Trichet will NOT cut rates is that he does NOT want to be seen as doing ANYTHING in response to terrorists security concerns lest he send the message that the terrorist also control (influence) the fiercely independent ECB. So, the timing, and subsequent interpretation, of a EU rate cut now would be horrid - actually harming the European economy due to the ECB and Trichet being seen as able to be pussy-whipped by terrorists. Forget the rumor. The Euro is headed back to 1.2400. For any of you who think Trichet IS going to cut EU rates, please short EUR/USD and set your stop losses... to deposit right into my account. Euro Has Biggest Drop in 3 Weeks on ECB Rate Cut Speculation Sam
Strange yahoo quotes: 19/03/2004,00:00:00,10295.85,10355.41,10163.71,10186.6,14574000,10186.6 22/03/2004,00:00:00,10185.93,10185.93,9985.19,10064.75,14523000,10064.75 23/03/2004,00:00:00,10066.67,10177.04,10020.75,10063.64,14582000,10063.64