Look At These Gap Statistics
Both major markets are chopping
around in the context of 13- and 60-minute downtrends as we approach midday.Â
As has been the case lately, some of the
strongest triggers surfaced in the pre-9:30 AM ET Globex session, this time with
multiple triggers to effectively guide shorts trading the “we think we got him”
overnight spike into the 13-minute downtrend brick wall.
As was the case yesterday heading into the afternoon session, trusting the 13 &
60 minute trends should provide a useful guide, keeping in mind that markets
often chop around after major trend moves and that extensions may be an issue
today.
Lastly, I thought it would be interesting to document the recent case of “gap-itis”
from which the market is currently suffering. Heading into today’s action, the
S&P has averaged a 1.0% gap since March 20, and a 1.2% gap in the last eight
trading days alone, which included Monday’s 2.4% whopper. Incredible … or is it
really? While the war effort and coalition is indeed causing greater emphasis
on overnight action than “normal,” such action shouldn’t be of much surprise in
general, given the migration of the markets to a true 24-hour marketplace in
terms of trade opportunities and liquidity.
Granted, liquidity at times is still atrocious and will likely be a continuing
issue to a large extent going forward. Yet as markets continue to evolve into a
truly round-the-clock community, US intraday traders may very well have to
adjust to survive, just as we did when SOES, pre-decimalization, and other
trading rhythms and advantages disappeared. Many of our course triggers and my
own recent successes reflecting my preferred low-risk, high-probability
scenarios have frankly come during “non-traditional” market hours over the past
few weeks. It means adjusting the work schedule a bit, but that’s a small price
to pay, if one takes this business seriously and understands it takes continual
adaptation and effort, vs. taking the easy road which will never lead to
consistent profits.
ES (S&P)Â Â Â Â Â
Tuesday April 8, 2003 12:00 PM ET       NQ
(Nasdaq)
Moving Avg Legend:
5MA
15MA 60-Min 15MA
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