Wednesday, July 31, 2013

In the news

Ever ask yourself what is the point of financial news releases since more times than not the market/stock price reacts opposite to what one would expect given the details of the release? For example AMZN jumped $10+ intraday after missing earnings expectations last Friday.  I guess the question would be who's expectations are being missed and why should we even care about someone else's expectations?  I for one (and many other conspiracy theorists) believe news is nothing more than a tool of manipulation to get traders and investors alike to react is an expected way and take advantage as they proverbially herd the crowd in the direction they desire.   I don't particularly pay attention to financial news that comes out but I do make sure I'm aware of these so called market moving news events and when its expected to be released.  You have to ask yourself again why would news be market moving?  Would it be because we react to anything that can potentially make or lose us money so closely that you can smell the greed and fear in the air?  Imagine if you already had a little birdie tell you the news ahead of these market moving events would you take advantage and position yourself accordingly based on the expected reaction?  Shame on me for even asking.  How could I ever question your strong code of ethics.  Unfortunately, not everyone shares our fear of God mentality.  However, if you believe as I do that news is a great way to buy or sell as the poor uninformed herd look the other way you can use this to your advantage.

As an example, today was the FOMC meeting.  Yes, one of those market moving events.  I could not tell you what Benny said but I can tell you this that we saw the highest trading volume in a month.  To me that signals that the big boys made some big moves today.  As you can see from the chart below the SPX came to within .35 of a point of the previous all time high of 1698.78 before closing way off its highs and near the low of the day.

Today's action was certainly bearish and the story that has unfolded over the past three trading sessions has been supporting the bearish case (price closing at or near the lows).  However, remember that our support level of 1684.3 continues to hold so I wouldn't want to jump the gun loading up short until we see a break.   If we do break then the price action we have seen this week would give me much more confidence to short this market.   So we wait patiently and watch and react.  Maybe this is the big boys positioning ahead of the jobs report on Friday?  Should be a market moving event nonetheless!

Thanks for reading!

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