It seems like we were subjected to an enforced trading diet late Friday, and apparently it’s working since as you can see my abs are starting to show. By the way, sorry if you just lost your breakfast. Obviously this isn’t a big surprise to anyone as fast drops/advances *ahead of medium or long term inflection points* usually are quickly followed by a shake out. Pay attention now as this is important: Especially on the sell side the dynamics shift considerably once those inflection points have been breached, as violent selling usually tapers out more slowly before a bounce.
I launched this blog back in August of 2008 right at the cusp of what many bears still regard as the entry opportunity of a generation. And I don’t think that would be very far fetched as it may be many more years until we ever see a large scale market correction resembling that of 2008 again. For the record, I for one wouldn’t terribly mind seeing a continuation of this bull market. Unlike many of the doomsayers du jour yearning to see the world burn I do not want to see the United States undergo another economic depression. And clearly the Fed has proven that it will do whatever it may take to prevent just that from happening.
Equities continue to be a mixed bag and while simple price tells one part of the story the volume profile also shows us the ranges where we should expect buying and selling pressure. Of course bear in mind that the volume profile is based on historical context and for a true perspective we would need to acquire fairly costly Level 2 access and then evaluate the offering and bidding lots. For the average retail rat Level 2 access is however way outside the budget so I guess volume holes it is.
It is Mario Draghi’s turn to torment market participants this morning, which means a market overview will have to wait until the wave of volatility has washed over us and hopefully left some of our open campaigns intact. In the interim I decided to channel my inner Nicholas Taleb and ruin your collective day by singlehandedly smashing what you hold most dear as traders, i.e. your perspective on how markets function and your ability to anticipate what may come next. And if you think I am joking then you are most likely doubly mistaken. Read on at your own peril: