Morning Call: Fed Day And Parabolic Move Means Uncertainty
October 29, 2008 9:36 AM
Well, I missed yesterday’s rally as it took me, and most likely everyone, by surprise. An article yesterday said that normally a huge rally would have had huge cheers on the floor but yesterday’s close was greeted with mild applause. Why? Because they didn’t see it coming and traders likely believe it was not “warranted”. It was short covering that got out of hand, IMO.
What happened i believe is once we cleared Friday’s high it triggered buy programs and it skyrocketed. This is similar to what happened in 1987, but in reverse. In 1987 the crash was mostly the result of program trading that got out of control. Every new level it triggered more “sells” and nobody could stop it. Much of this has been prevented since with “curbs” put in place when markets fall too much. Basically, this means that programs are cut off. However, curbs are only placed to limit downside moves, not upside.
At any rate, I personally believe this rally like not at all. The problem with these moves is that they create a vacuum for the market to fall just as much. There are zero points to stop a fall at any point from yesterday, as I see things. This creates more uncertainty going forward - and more risk. This move would likely have more legs if it has taken several days - not an hour. It is a parabolic move that can also create the same in the other direction. Therefore, I believe traders were furious with the move and were very frustrated at the close. It just dramatically increased their risk and uncertainty.
For today, if we clear yesterday’s high - it will be a “close” day. Meaning that the close is all that matters and if we are decidedly negative into the close, selling is likely to accelerate. These days are very hard to predict and the Fed meeting will likely make this impossible to trade.
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I was going to say earlier that “normally” a sideways move here is good…and that once the SMA’s catch up, we should push higher…but that has already happened. Didnt bother saying it as this is Fed day…and who knows
9380 is a key number on the Dow …if we clear that this crazy thing will probably shoot up again….
No action after the fed at all…. I guess it is going to trade on the chart - other than it is a close day… it is trying to reverse off a key sma right now
If people want to be long this nonsense, this low needs to hold 8939 on the Dow
If this low is going to hold, we should bounce about 9000… traders likely want to sell this down, but have no firm number to do it
We have no firm high intraday but have what could be a firm low…. if that clears into the close it is likely a problem… would rather get a new high and reverse so traders will sell this down… this could get reasonably volatile into the close…. no movement…its too early i believe
doesnt appear we are going to get a firm high… if we do I think they will tear this apart… I believe this low has to hold, especially into the close here or the shorts may jump in
MACD is crossed short BIG time short… I normally do not care about it… but i think people are looking for an excuse to sell this down… we will see
If we get under this low, there really is nothing to stop the fall, as mentioned, we would likely have to get a new rejection of a low… then again, we never even came close to getting one yesterday
hmmm no action at all…weird for a fed day…yesterday may have scared the shorts and there is no firm number to short it and there is a number to be long - for now at least
There is a free 150 points above 9000…send me a check… ha
Make that 220
New high and climbing, there is still no firm high
If we did not have 9380 up top i would say the buying would pick up steam into the close here… it may anyhow
If we clear 9380, especially before 3:30, shorts will likely once again scramble for cover here
9305 and climbing…. up 500 again is not impossible here… if we clear 9380 i think its likely
9350….
9380 is all that is stopping this move i believe
If not for 9380 I would say we would make one more big push higher into the close… but not sure because of that
Lucky the clock is going to run out, they reversed it at a new high at 9363 and they would sell this into oblivion… why people buy at 9363 when we have to clear 9380 is beyond me…
This low better hold or we it will close at the low
cleared…. ha… the darm clock ran out otherwise the rout would have been on
I had typed before and was going to post it, but it seemed to late to sell this down big… that “if they really wanted to sell this down, they would make a new high, just under 9380 and reverse it”… BINGO… but now the clock has run out or down 400 would be in the cards
Well, popped up a bit off the low as the clock ran out…. another 15 minutes on the clock we would have seen a good old fashioned ROUT Ohh well