Reason why market just tanked

[waggie945]

As I mentioned yesterday on a brand new thread entitled, "Bull Market Correction" . . . the SPX had major fibonacci support at 1087

Today's intra-day low for the SPX: 1087.16

http://www.elitetrader.com/vb/showthread.php?s=&threadid=30121

 

[waggie945]

So much for using technical tools like fibonacci retracements, eh Trend Fader?

 

[jem]

nice work

 

[ElCubano]

Quote from Trend Fader:

Are you guys nuts? News doesnt effect the markets?

Lets say the market is forming your super bullish pattern that your guru systems and patten recognition simulations are picking up... Then u get the trigger and go fully long... Market starts to tick up higher.. then oops terrorists assasinate a member of the saudi royal family... whats gonna happen? what are u going to do? Your stops will surely get hit... are u gonna buy more because news doesnt matter and your patterns are smarter?

My point is that rumors and news do affect the markets.. todays news was minor and was quickly resolved so it wasnt a big deal... but there are days where news will move a market significantly.. aka.. spanish bombing and yassin killing. You gotta be really stupid to continue using your technical methods when there is a major news event taking place.

--MIKE

I agree....news moves markets. But that doesnt neccesarily mean you need to evacuate ur system..as a poster pointed out..the distortion may in fact be a wet dream in disguise...AKA..anthrax letters...

 

[TriPack]

Quote from Trend Fader:

Are you guys nuts? News doesnt effect the markets?

Lets say the market is forming your super bullish pattern that your guru systems and patten recognition simulations are picking up... Then u get the trigger and go fully long... Market starts to tick up higher.. then oops terrorists assasinate a member of the saudi royal family... whats gonna happen? what are u going to do? Your stops will surely get hit... are u gonna buy more because news doesnt matter and your patterns are smarter?

My point is that rumors and news do affect the markets.. todays news was minor and was quickly resolved so it wasnt a big deal... but there are days where news will move a market significantly.. aka.. spanish bombing and yassin killing. You gotta be really stupid to continue using your technical methods when there is a major news event taking place.

--MIKE

Rumors and news of this type do have a market impact - but the impact is typically to exacerbate the underlying trend. But some rumors are taken off the shelf and used over and over to push the market this way or that. The "Saddam", now "Bin Laden Capture" rumor is one example of this. I can't recall how many times Bin Laden has already been captured by false news reports used to move the market.

I think this is what Cheese and sulong are talking about - because these news stories tend to revert back to the mean - like today's movement, for example.

News that is of a truly "surprise" nature and that is significant to the market fundamentals (like a surprise rate move) will change the trend direction for more than just a few minutes or hours, but these news reports are extremely rare.

 

[cosmic]

What really moves is not even so important as the fact to be able to stay in the market flow regardless of outer influences & to stay in flow with your usual setups...but as timely newsfeed with good, customized alerts can pay for itself during the trading year & is sometimes the "cream of the crop"

good trades,
cosmic

 

[sulong]

Quote from TriPack:

Rumors and news of this type do have a market impact - but the impact is typically to exacerbate the underlying trend. But some rumors are taken off the shelf and used over and over to push the market this way or that. The "Saddam", now "Bin Laden Capture" rumor is one example of this. I can't recall how many times Bin Laden has already been captured by false news reports used to move the market.

I think this is what Cheese and sulong are talking about - because these news stories tend to revert back to the mean - like today's movement, for example.

News that is of a truly "surprise" nature and that is significant to the market fundamentals (like a surprise rate move) will change the trend direction for more than just a few minutes or hours, but these news reports are extremely rare.

news stories tend to revert back to the mean

Thanks TriPack,
This is exactly what I was trying to relate to. ( in my own fumbling way)

 

[cosmic]

exactly: just another shortterm cycle

ready to be exploited

best,
cosmic

 

[Trend Fader]

Lets get real over hear... they tend to revert to the mean after the fact. In real time trading that is very dangerous type trading.

In my history of trading I can remember countless times when the news moved the markets so much it screwed up intraday charts and the market never reverted back to its mean for days... and sometimes longer than that.

A very dangerous method is to fade news reports.. because u never really know if they are serious or bullshit.. I agree 90% of the time they are pure bullshit like that russian nuke sub blowing up... but the one time that its legit u can get crushed.


--MIKE

 

[sulong]

Quote from Trend Fader:

.. I agree 90% of the time they are pure bullshit like that russian nuke sub blowing up... but the one time that its legit u can get crushed.


--MIKE

90% is very good odds, don't ya think?

Here's a chart about the time this conversation started.

What is so different about the price action around your news time?