Confuse us says: The long and short of option expiration
Option expiration is a study in volatility.
If you accept the premise that wall street insiders have an edge, then you are ahead of the game. The trick is to synchronize our mind with theirs, and stay one step ahead of the pack rather than always being a step behind.
If you also accept the premise that the market tries to confuse as may traders as possible, go to the head of the class.
The early longs got trashed at the open, and it looked like the trend down day was being established. The two tick lower low at lunch then smoldered awhile, and then squeezing the shorts, ran for 20 points, passing the globex hi. Profit taking set in at the weekly middle, and the market closed near the daily middle.
The battle between long and short term traders continues, as it always will.
Trend traders cannot be stubborn when the bounce is stronger than expected. Many professionals prefer to go to lunch flat and relax. Then they will risk a portion of the morning’s winnings for the afternoon session.Â
Trading with the trend until it stops working is one of the most valid forms of trading, and should be embraced by typically conservative traders.
Fibo traders were rewarded for guessing right regarding the down up down sequence.