Why the gap down and falling price today?

Predicting a gap in advance is beyond my ability, but watching the futures pre-market will tell you if we open with a gap and if we have a gap open that is a very important input in order to predict what follows after the open. Just like a flat open is equally important.

I would not be surprised to see us open gap down on Monday to deal with another open gap below at 1246,50 from last year. Maybe we can then find support and start filling the gaps above from May. :)
 
Quote from Laissez Faire:

Predicting a gap in advance is beyond my ability, but watching the futures pre-market will tell you if we open with a gap and if we have a gap open that is a very important input in order to predict what follows after the open. Just like a flat open is equally important.
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Can you elaborate on this?

Are you saying that a gap opening tells you something different about how the day is going to be than a flat opening?
 
Quote from 1a2b3cppp:

Can you elaborate on this?

Are you saying that a gap opening tells you something different about how the day is going to be than a flat opening?
More...

I'm not affiliated nor a subscriber, but if you are so interested in gaps, you might check this guy out:

http://www.masterthegap.com/

Like there is porn for every fetish, there is a guru for every trading phenomenon.
 
Quote from 1a2b3cppp:

Can you elaborate on this?

Are you saying that a gap opening tells you something different about how the day is going to be than a flat opening?
More...

Of course.

That`s index trading 101, but I do not have time to elaborate right now. :)
 
Todays gap was of no importance imo. I think sundays gap was the one with real importance. I remember back in june or july 2010 the same price pattern. If so, a short term tradable bottom is near.
 
2 things, euro situation and the poor jobs report.

Futures were really weak after the close yesterday. I was surprised that at 11pm EST, TF was down 5-6 points. It kept getting worse, by the time euro markets open, TF was down 10. The situation is getting worse in Europe. Spain injecting cash into its banks. Greece exiting the euro. Rampant unemployment.

When the jobs report and inflation numbers hit at 8:30pm, TF crashed a good 12 points. Probably would not have gapped down if not for the jobs report.

Right now, things won't get better until euro works itself out. Being that it's June, doesn't help either.

Quote from 1a2b3cppp:

Job reports or something?

I mean it's an excellent buying opportunity and I picked up some SPY at $129 this morning, I'm just curious why price dropped so much from yesterday.
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Quote from Laissez Faire:

Of course.

That`s index trading 101, but I do not have time to elaborate right now. :)
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I'm curious to hear if you ever have time to share your secret knowledge.
 
Quote from 1a2b3cppp:

I'm curious to hear if you ever have time to share your secret knowledge.
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I do... waiting for a video to cycle thru camtasia. Damn things seem to take forever :)

Gaps are meaningless when it comes to a day's bias. There is no edge there at all, period.

The open-range can tell you much. One of many things would be directional bias. When the eminis lost containment of open-range support late morning, it was high-odds to keep pushing sideways or lower from there. So anyone still interested in trading should be focused on sell signals only from their trade-entry method of operation.

Sell signals near or below resistance of the open-range bottom is where easiest money was today. The same general process repeats itself way more days than not, in all markets and symbols.

That's one use of this powerful bias filter. If everyone adhered to that use, many more failing traders would eventually find success. But the vast majority won't, they'll keep stubbornly stumbling along their current failed paths and not waver until fiscal death.

Which is exactly why the rest of us have career security as traders, forever. Darwinism is the third constant, behind death and ahead of taxes.
 

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Quote from lwlee:

2 things, euro situation and the poor jobs report.

Futures were really weak after the close yesterday. I was surprised that at 11pm EST, TF was down 5-6 points. It kept getting worse, by the time euro markets open, TF was down 10. The situation is getting worse in Europe. Spain injecting cash into its banks. Greece exiting the euro. Rampant unemployment.

When the jobs report and inflation numbers hit at 8:30pm, TF crashed a good 12 points. Probably would not have gapped down if not for the jobs report.

Right now, things won't get better until euro works itself out. Being that it's June, doesn't help either.
More...

See, this is where "causes" ultimately become subjective. The Euro was actually up today. If Euroland weakness was part of the cause for US market weakness, the Euro should have been down, no? It was down every other day the market was weak this week and when the Euro spiked up on some rumor, the ES spiked up, too.


The Euro and the ES were moving in lockstep overnight early Friday, though, and only decoupled after the US employment report. So, for part of the night, you could say the cause was weakness in the Euro, but then at 8:30 Eastern time, that cause became inoperative.

But, ultimately, none of this matters, if you are a trader. You can either trade what the price action dictates or you can try to find external reasons for the price action. The two activities are both sufficiently time-consuming that no one individual can do both competently, even if they were to dedicate 24 hours per day to them combined. If you want to be a world-class trader, it takes more than 12 hours per day of work. If you want to be a world-class interpreter of the causes of market movements, it takes more than 12 hours a day to do that, too.

So, take your pick.
 
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