Trading the News
Trading the News: Do you trade the news? Some technical traders ignore the news, but understanding when it gets one-sided can offer extraordinary trading, especially for those who know how to read the markets.
A One-Sided Market
Early last Wednesday morning, January 20th, news outlets like CNN were talking gloom and doom before the US markets opened. The European and Asian markets were selling down hard, they said. The markets were in dire shape. They even had a name for the coming trading day: “Red Wednesday,” as if the market would see no bottom.
Other news websites that morning were all very negative on the market. One announced, “The Party’s Over.” Another declared, “The Stock Market is Plunging.” A popular site said, “Welcome to Red Wednesday: Is it 2008 all over again?” You couldn’t get much more negative than that.
Trend Change?
When the public (as reflected by the news) becomes one-sided, it’s often time for a trend change. Although everyone was predicting more selling with no end in sight on “Red Wednesday,” those traders who understand the markets and know how to read them saw the trend change. They were the Savvy traders who were able to see the outstanding trading opportunities when the news became so biased.
Let’s see how this played out in the S&P e-mini futures (ES) on that day (Continue reading here … )
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