This morning at 730 CST, stocks extended their losses, with the Dow looking at around 9350 level and the S&P down to the 1012 level.. In a classic, sell the rumor buy the fact, savvy traders profited off of panicked longs, or weak shorts who either puked their longs for losses, or more likely got short in the hole after the number… Literally in about 2 minutes after the number, the indexes had made their lows, but hung around down there long enough to make the weak shorts think they would eventually be all right…
Here it is 12:45 PM and the markets have almost totally rebounded, the Dow over 130 and the S&P trading back to the 1027 level to be unchanged, to slightly lower… Typically this is what cuts traders to bits, waiting to get short on the number, and then not having an exit strategy if, what we saw today transpires… New lows followed by a grind higher for the rest of the day.
This market action reinforces how markets typically work.. They exist to punish all but the most un-emotional traders… Perhaps now that we have rallied back to unchanged or nearly unchanged, remaining players will now switch their bias back to bullishness, since it has rallied all the way back… having been there and done that and felt that emotion on many occasions, my advice is to initiate a trade with a tight stop, realizing that if you are wrong, the market will let you know in short order..
Back to the Grains… Nov beans took it on the chin today, moving lower this morning once the 910 area was breached… looks like the talk of harvest delays due to rain, and the lack of any frost finally is hanging over this market. You may recall that all last week, the market was rallying at the 903/04 level and then breaking around the 930 level… in a choppy sideways trading 25 cent range.. Today when we broke through the 903 level, it was good for a 7 or 8 cent scalp, but the market now is looking at the 900 to 905 level as resistance….
Just a technical trade observation you may be interested in.