Here is a 30 minute bar chart covering the past two weeks' day sessions in the e-minis. I think this is a genuine demand shock - very high volume and a very fast move, even though it got started with a mortgage rescue rumor. If I am reading the market correctly any reaction should hold the midpoint of today's range - right now this is about the 819 level.Upside target will be 900 and higher.
11 comments:
I very much appreciate your insight and market expertise kind regards, Janet
Carl I dunno about whether its demand shock...it could be knee jerk reaction (short covering)
Yes, it is always hard to believe what you see.
Looks tempting, but I will jump on it above 845
very nice analysis as always. My guess the market will assume today's down trend unless there is another rumor to pump iup.
Dear Mr. Futia, I appreciate very much your analysis.
May ask you a question?
I am an amateur on line trader. Today, during the session I couldn't realize the reason for the sudden upward move started in the last hour. Only after the market was closed I read about the mortgage rumor.
I have subscribed dow jones news wires and price sensitive news; I was looking around bloomberg, cnn money cnbc, reuters and other site, but I couldn't find a hint of the news during the sessions anywhere.
Is there any Internet site or subscription giving real time (real real time) market news and rumors (like this one) you can suggest me to be up to date during the next sessions (I am a beginner)?
It's sad, but I think at the moment the market is gossip driven... today is just the evidence of it.
Many thanks in advance.
Geneis
Dear Genesis:
Your are asking the wrong person. I pay no attention to news and am generally the last person to find out about any rumor or event.
From Brett Steenbarger's website: What has tended to happen going forward when the market has reversed from a sizable loss to a sizable gain?" I went back to the start of 2000 in the S&P 500 Index (SPY) and examined past occasions in which the index (like today) moved more than 1% below its open before closing more than 1% above its open.
Out of 2287 trading days, only 38 have shown such strong upside reversals. Four days later, SPY was down by an average of -.61% (17 up, 21 down). Across all other occasions, SPY averaged a loss of -.05% (1159 up, 1090 down). While a trader might be tempted to conclude that strong upside reversals represent trend changes and lead to further strength over the next week, that hasn't proven to be the case since 2000.
The afternoon rally was a stupendously amazing fill of the morning gap. It was, indeed, amazing because the morning gap was so huge at 16 points of S&P and the up move was an over 30 S&P points move within an hour.
Of course, the afternoon rally started at exactly 3:00 pm, immediately after the mortgage subsidy rumor at 2:59 pm.
The rally was purely a short covering rally caused by confusion of the rumor and an initial upward shock against the strong downward trend that had accelerated after the breakdown of a major support level for E-mini at 810.
The timing of the rumor after a breakdown indicates government intervention in order to arrest the plunge. PPT in action?
This obvious intervention by the government is turning the market into casino that people will soon fear to enter.
For tomorrow, as the market often reverses after a gap fill, should we expect the market to resume the downward trend in spite of the rumor triggered, gap filling hiccup??
CNBC reported it the minute the market started to move up. Although most of the talk on CNBC is garbage, I recommend keeping CNBC on throughout the day just for these instances of breaking news that can reverse market trends. Also, CNBC's own financial reporting has, on occasion, been of such import that it has also caused market trends to reverse.
Genesis,
Try this
http://www.finviz.com/news.ashx
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