Hello, again.
First of all, in case there is a misunderstanding, I did not mean to imply that one should pre-suppose that a down Open would provide odds that the day would end up more negative, just that as the trend from that point develops the momentum as the day moves on lends a clue to which side of the market to be on for an intraday trade.
I agree the past few weeks have been difficult, for myself anyway, to try to get a feel for the trend post the Open. But there were often cases ... during the bullish run-ups ... where the market would explode on the Open and mystify many by ending up down, sometimes significantly. I remember two such cases offhand, one where IBM reported good earnings and the market peaked at 10 EST and declined significantly. Similarly, INTC had the same effect. Without looking at piles of data I believe the IBM example was in the Spring of '97 and the INTC the Spring of '98.
Now I realize these are only two examples but I recall them as being significant because of the large gap Open and the high-profiles of the reporting companies.
The Volatility since July/August has made the moves quite striking, I agree. It makes for very difficult times for Position Traders and adds a dose of adrenalin to the activities of the Day Trader. Perhaps it is as you say, the efforts of traders who are clinging to a light at the end of the tunnel, perhaps the light will get somewhat wider. I'm more persuaded to think the market, at this point in time, is and has been in a sort of "stair-step" decline which makes for possible large profits for those who trade it as such. The market appears to rally on scraps of news and then sells off to lower lows each time. It's just getting picked apart and I think it will continue to do so until there is one climactic selloff or the DJIA drops at least into the mid 6500 range.
Of course, my strength (such as it is) is not in making such long term calls. It's just an opinion and certainly no better than anyone else's. |
