Friday, January 10, 2014

The Invisible Hand Overnight

7 points is not chump change in the ES these days.  To see that happen overnight has meaning.  And there is an eerie tendency for these creep up moves higher when markets are quiet before an event.  Maybe one of the most understudied and useful phenomena in trading.  The trading before a big event is driven by strong factors that are often predictable.  These creep up moves higher are driven not by a desire to get long ahead of an event, but by the absence of sellers.

By the way, leaning bearish on the market, otherwise, I would have gotten long yesterday afternoon to sell at 8:29 AM ET today.  Also think the number disappoints, solely due to numbers being bumped higher and high expectations, rather than any particular insight.


Anonymous said...

Well done on your instrument preference for bearish bet.

"Right now, if I were to make a bet on the downside for the US equity market, I would choose in order of preference, 1. short USDJPY 2. short China 3. long Treasuries 4. short crude oil 5. short S&P 500"

Market Owl said...

Thanks it was gut feel and reluctance to short the S&P which will be the last beast to go down in this bull market.

Anonymous said...

Wonder under what circumstances, would you start shorting S&P 500, instead of dip buying? Thx.

Market Owl said...

Right now, it is better to short the Nikkei or Hang Seng than go short the S&P. I want to see a marginal new high sometime in the next month or so and will short that.