Submitted by Nic Lenoir of ICAP
S&P futures put on another nice intraday bear trap today. As we had discussed in the morning, 1,082 was partially violated but we needed a quick acceleration and a break of 1,075 to confirm the break on the Dax of the 5,750 level. As we are getting used to this kind of bear trap, we had indicated that the market should move down quickly, otherwise any hesitation would result in testing and breaking 1,091... As always the market does not fail to disappoint.
Beyond those constant traps which are not common place, it's worth noting the pace that this market exhibits when it decides to start moving. For example we move 1.6% in futures in just under 3 hours between about 6.45AM and 9.40AM. Thats a nice pace of 873% uncompounded, or 5800% compounded. Quite punchy one might say. There were earnings releases involved, and if one looks closely, some companies did disappoing in the mix.
This goes to show that this market is all about short-term momentum, fundamentals are ignored, and one better fasten their seat belts, because it is not about to get better.
Good luck trading,