Its obvious why another terrorist attack would throw the market into panic. It would basically mean that all the US government has done since Sept 11 has had no effect. That is why it was important to the market whether the incident in Milan was an accident or planned. With everything else going on in the world right now [b/] : Venezuela, Argentina, the Isreal-Palestinian conflict, Afghanistan with pockets of Al Qaeda, Bush's intent to invade Iraq, and the general world economic malaise, it would take very little to tip the scales and put us eye-ball deep in serious doo-doo.
As usual it is very risky to interpret the news, after CNBC announced it was small plane crash the market started rallying retracing more than half the drop started at 11:55 or so . You would have thought it would keep going or retest with a higher low since this was obviously not a terrorist attack (in Milan???) But the market dropped again and kept falling and falling , filling tuesday gap only to bounce in a flash at 1100 ES 1375 NQ.
Just a couple of weeks ago, around Easter, there were warnings of possible terrorist attacks in Italy. Milan is the financial center of Italy. Italy is also the home of the Red Brigade and other nefarious characters. So, why not Milan? The second drop came when the Italian Senate President made a comment that he thought it could have been terrorism.
Well I was about to go long in a few positions, but even before the 'news' came-out I canceled all orders based on the odd market action. From a fiscal standpoint it ended up being the wrong choice, but if the news had ended up worse who knows what the reaction would be. If you were a scalper (or just real short term) that gig-move would have been cake, especially if you had a "better" news feed than me. What bothers me is I had to make a decision based upon other traders reacting to news I did not have yet... This angers me, who here had the news 'early' (ie. 5 min. before me)? And who is your news service? What chat rooms if any had it? etc.? Thanks RAY
That is the crux of news trading. No matter how good your news service is there is always someone who gets it faster or who is able to act on it faster. Thus I interpret news based on price action. If the news comes out and big player X comes in with a big order - it will move the market regardless or whether big player X interpreted the news "correctly".
Well for me it was obvious it was not the terrorist, just stupid paranoia again . But was I going to go long because of this assumption ? No. The President of the Senate's comments? Who's that guy?
Order of events. IMO 1. Market goes down. 2. News people ask themselves the question. "I wonder why the market went down?" 3. They scan the news wires if need be and pick what they consider to be the most prominent news item. 4. They report "The market went down on news that an airplane crashed in Italy. 5. Did the plane crash cause the market to go down? NO Will some people think they can make more money in the market if they watch a certain news service? YES
5. Did the plane crash cause the market to go down? NO Will some people think they can make more money in the market if they watch a certain news service? YES [/B][/QUOTE] What world do you live in? Yes, the market moved because of the initial reports of a plane crash in Italy. Yes, I want the best news services, yes I will be able to make better decisions with proper and timely information (I am not a scalper or anything close one). In this instance I placed my buy orders below the market expecting them to be 'hit' later in the day. I ended up canceling my orders due to the 'odd' price action. If I had better news would I have done anything different? No, but what I do know is that if the market was slightly lower when this incident occurred I would have raised both eye brows (and been the proud owner of a lot of stock), and knowing what the 'news' was would have been beyond importance to me and my ability to evaluate my positions. I am not sure how you trade or what sizes you deal with, but the only thing that scares me in any market is a 'big' news event going against me when I am "all in." Enjoy
When that news broke, the ES had made a morning test of 1120.50 and was retracing back to the breakpoint at 1125.00...Within about 2-3 minutes the market spiked lower to 1116.50 before retracing to 1122 and then making a huge one way plunge down to 1109. Looking over the volume of when this occurred, it is obvious that the majority of daily volume occurred during that 30 minute period of total price panic... Alot of what has not been said is that with a day to expiration, there is alot more sensitivity to any slight movement because of the implications in the options markets and the need to hedge gamma/delta...