The Markets are Still Nocturnal
Thumbs up to TraderFeed’s Dr. Brett and his post Day and Night Sessions: This Bear isn’t Nocturnal. Dr. Brett shows that the resiliency/bullishness of the overnight market relative to the daytime market that I discussed in my post The Markets are Nocturnal is still intact.
In a nutshell, bullish trends in the stock market tend to play themselves out in the overnight market (yesterday’s close to today’s open), while bearish trends in the daytime market (today’s open to today’s close). Today’s bearish market continues to follow this pattern.
How could this simple but powerful observation be exploited in a trading system? I don’t have an answer for that (yet), but it’s on the proverbial to-do list. As always, more to follow…
Happy Trading,
ms
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Filed under: Stock Market Mechanics | 1 Comment
This is very true. I have some clients that are absolutley terrified by what they term “Gap Risk” I have been trying for years to explain to them that crashes happen durring the day not the overnight. If for no other reason than the 5% trading curbs in the futures overnight session.
But good post and links, maybe I will share it with them.