The computers are running the show. Why do I say this? Because about 40% of the current gap down from the cash close happened from 4:00 PM to 4:15 PM. So in an overnight session that last 17 hours, 40% of that gap down happened in the first 15 minutes without any news. So 40% of the gap down happened in less than 2% of the overall overnight time period.
In order to grab your positions, either long or short, you have to think more than one step ahead, but not too far ahead. It's a fine line. Just even one step ahead is not enough to get in a good position because the computers are all wired to jump in "one step ahead".
Otherwise, you are left in the dust with mediocre entries that have poorer risk reward characteristics. That is why the lows and the highs of the day rarely last long. The computers are gobbling up shares at these extremes from the common folk.
This has to be the worst case scenario for longs. You see the oil futures down 2 bucks and the ES is gapping down 10 handles from the cash close. We are coming back higher as the US traders arrive at their desks reflexively buying futures on lower oil but I don't think it will last. Calling for a trend down day today.
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2 comments:
Has oil topped out or do you still think it's going higher?
I still think oil is going higher, and eventually equities will go even lower and test 1260, but probably not after we churn a bit more between 1295 and 1335.
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