Wednesday, October 29, 2008


We've been trading in a typical range day that occurs on most FOMC days. The most interesting aspect of the day was the last 5 minutes of the day. There's speculation that it may have been GE CEO Jeffrey Immelt's comments from Spain or HF program selling. In either case, it broke the market's support for today. I didn't trade today, but I can't imagine trading on a day like today.

I refuse to trade because the market has become so sensitive to external stimuli, that you can get caught off guard and will not be able to respond to sudden movements that occur in a matter of minutes (or seconds). For example, in the last 5 minutes of today, you probably thought that "Oh whew, we made it the last hour, thank God". You were probably ready to close your books and maybe even take a piss break thinking that things were ok.
That is, until you came back.

There were too many failed patterns today that made it not worthwhile to trade. The "dojiness" of Fed days are common, but the markets are swinging so much that your P/L can range from -10% to +10%. That's not good and you're better off going outside to have a picnic somewhere. Unless there is a clear direction via breakout or breakdown, I will mostly stay in cash. But, that doesn't mean I'll won't do hit-and-runs on the market until I find better uses for my money with holding periods that last longer than an hour. The risk/reward just isn't here.

S&P 500 1-day

S&P 500 3-day

S&P 500 10-day

S&P 500 6-month

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anon said...

Neat commentary and astute obs.

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