Thursday morning caught me off guard with the huge gap down on the ES. Was there any way to anticipate that monster overnight move? The 10-year yield didn't budge all night and only started spiking an hour into the morning equities session, and the jobless number wasn't significantly off expectations. There really hasn't been that kind of movement in months.
Anticipating big gaps overnight in futures?
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Can you post a chart?
I'm away from my trading computer and would love to see it.
Thanks.
I'm away from my trading computer and would love to see it.
Thanks.
Simple solution...monitor the overnight price action especially when there's schedule key market events. If you get a trade signal...trade it. If not, continue watching and waiting or go back to bed.
By the way, we had another monster gap day earlier in the month on Thursday August 1st but to the upside. That too was key market events driven.
I'll bite.
The market appears to be very technical. Trying to make sense of fundamental information and news releases can be very confusing - at least it was for me.
So, what I did was to be prepared for a movement, but I did not try to interpret the news or how price would react. As a day trader that is.
For example, the last time I did research on it, the crude inventory releases statistically had expectations of a 100 cent or more swing, starting either 20 minutes prior to the release or around the release.
However, the direction of that swing could not always be interpretated meaningfully in context of the release (at least not to me). Also, it would often be a whiplash move distoring a bigger trend, which the market would often resume after that move.
Same with other news releases in the market. I remember France being downgraded by S&P and the market barely budged. Not what I personally expected.
for example here:
The jobless claims were 224k vs 230k expected, and the yield on the 10-year Treasury was 2.70% since Tuesday, all of a sudden the S&P gaps down and 1-2 hours into the market open, the 10-year climbs to 2.80%. I'm assuming all of this is due to fears of the Fed taperings its POMO. Unfortunately I don't have the pre-market charting but from what I understand the market was already down with the econ data release Thursday at 8:30AM.
I guess what I don't understand is how the market gaps down with a jobless claims number so close to estimates. How bad would the number have had to be for the market to stay flat?
The jobless claims were 224k vs 230k expected, and the yield on the 10-year Treasury was 2.70% since Tuesday, all of a sudden the S&P gaps down and 1-2 hours into the market open, the 10-year climbs to 2.80%. I'm assuming all of this is due to fears of the Fed taperings its POMO. Unfortunately I don't have the pre-market charting but from what I understand the market was already down with the econ data release Thursday at 8:30AM.
I guess what I don't understand is how the market gaps down with a jobless claims number so close to estimates. How bad would the number have had to be for the market to stay flat?
The market overnight price action was already in a downtrend on increasing volatility prior to Thursdays 0830am est Jobless Claims report. Thus, the issue is the overnight schedule key market events and breaking news that occurred before the Jobless claims 0830am est event.
Europe retail sales, Egypt, Wal-Mart and a few other stuff.
Therefore, I think you're really asking is how come the market didn't stabilize instead of dropping further when the Jobless claims number was so close to estimates or why were those other key market events/breaking news more important than the Jobless claims ?
I don't think it really matters. The only thing that matters was that the trend was obviously down on already existing negative news prior to the Jobless claims numbers and things got worst after the 0830am est although the markets made a weak attempt to stabilize itself in the regular trading session.
There is a tendency lately for the market to go down on good US news because of fears that will trigger the Fed to start tapering sooner.
At some point sentiment will shift and good news will lead to rises, but not until confidence replaces concern over the crutches being taken away.
At some point sentiment will shift and good news will lead to rises, but not until confidence replaces concern over the crutches being taken away.
Gaps are the reflection of market reaction to developments while the US market is closed.... usually some announcement about rates, Fed, earnings, some influential person's jaw-flapping, etc.
I doubt there is any way to anticipate other than to know something is coming and take a position in the direction of your anticipated reaction to the event.
Agree but just as important, when the U.S. stock markets are closed and while the futures markets (e.g. Emini ES futures, Gold GC futures, Crude Oil CL or Brent futures, Eurex DAX futures, EuroFX 6E futures) are open...they will react too ECB, IMF, Asia/Europe schedule economic reports, global breaking news resulting in strong trend movements in the overnight price action...setting up big gaps on the U.S. stock markets regular session price action at its open.
The only way to be involve is to be awake (not asleep) in the overnight trading session assuming the trader is in North America...prepare to trade if/when a trade signal appears via whatever trade method is being used in the overnight price action.