This entry was posted on Wednesday, June 20th, 2007 at 10:33 pm and is filed under market commentary. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
I watched the market today, like I do everyday and saw we had some mixed trading in the morning and a little bit of selling in the afternoon. Nothing dramatic, no panic selling, nothing to get excited about all in all a very “normal” day. All my systems performed well within their parameters and I stayed ahead of the market by being down less than the market and adding some exposure on the way down.
What always surprises me about days like this is the amount of reaction they cause. I see a headline on Yahoo - Stocks plummet on soaring bond yields. CNNfn goes with Bears come roaring back. I also saw threads on elitetrader.com saying the market was “falling apart”, “how far down”, etc.
The reality is that 1% drop in the S&P is not that uncommon. A quick scan shows that since 1/1/2004 it has happened 64 times out fo 852 trading days or 7.5% which would be about 1 in every 14 days or once every 3 trading weeks. Think about that, once ever 3 weeks we get a day like this. 1% down days are 25% more common than option expiration weeks. They’re 4 times more common than emini futures rollovers. Yet neither creates near the reaction.
You’ll notice that Dave and I rarely do daily market “commentary”, the reason being that 99% of the days are pretty much the same. Market goes up, market goes down, market stays about flat. Every now and then (i.e. 2/27/2007) we get a day that is exciting, but otherwise it’s just more of the same. My plan for tonight is the same as every night: run my system scans every night, enter the orders, drink a beer, then sit back and let the market do it’s thing tomorrow. The most difficult decision I’ll have made in the past 24 hours is which type of beer to drink tonight. This is the beauty of system trading.
- John
June 21st, 2007 at 8:06 am
[...] has an interesting take on yesterday’s selloff. His biggest decision last night was what type of beer to drink. Who knows if yesterday was the [...]
June 22nd, 2007 at 1:50 am
You have to be careful though with your beer drawdown. Many beer drinkers don’t understand the perils of drawing down too much of your beer early, and letting the foam rise inside of it. You need to have faith in your beer drinking and know now to change your sip sizing on a whim or feelings.
I recommend Drinking in the Zone by Mel Gibson. A real eye opener.