One characteristic of a strong market--and a great sentiment indication--is the ability of stocks to absorb bad news and sustain buying interest. We saw strength in the preopening market going into the GDP announcement at 7:30 AM CT, but when the news came out worse than expected, we sold off quickly on high volume. That led to a quick bounce and a retest of the lows on much reduced volume. When we could not sustain those lows, buyers entered in force with strong NYSE TICK and we broke above the overnight highs to test recent multi-day highs. Knowing expectations for economic releases and seeing how markets trade around surprises and disappointments can be quite useful in setting up morning trades.
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6 comments:
Good for day trading, but how long can the market turn its head on piss poor economic news? Not only was the GDP number lousy, but the revision down should be considered criminal... I'm in cash and getting a front row seat to possibly the greatest show on earth!
or just get S ES Darren, I am at 870
cash Darren?.......just go short ES at 870 (the pre fed usual pump up)
Brett, you're a lot more sanguine than I am about this market.
I've been playing on the long side and growing my account the past 6 weeks, but I expect the equities bus to fall off the mountainside soon enough. . .
I guess it all depends on your time frame. Looking at the weekly chart, I was expecting a pullback on the ES based on the last two candles (an admittedly weak hanging man followed by a dragonfly doji). But so far we are not seeing the dark cloud cover needed to confirm a top.
Unless we close below 860 tomorrow I am going to hang in there a few more days before selling.
Hi All,
I have to go with what my indicators tell me, and they have shown continuing strength, not divergences and weakness. As short term traders, we're paid to trade supply and demand, not to predict the economy.
Brett
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