Yesterday was one of those days you could throw out all that you knew about trading and just watch in amazement as 900 billion dollars evaporated into thin air. As you are all probably aware of by now, the market reacted violently to the house repudiation of the bailout bill and dropped an unprecedented amount. As you can see on these charts, some of the bars were 50 pts long, so I had to switch over to 1 min bars from 3 minute bars just to stay in the game. It was like riding a bucking bronco and I stayed very conservative and only took a few trades, and then only traded one contract, yesterday was a good day to lose a bundle or make a bundle if you were in an aggressive mood. Myself, I stayed conservative. I am sure there are others that would have done differently. As you can see, the market started down as the votes were being tabulated on the bailout bill, but I worried that a large block of yes votes may surface and the market would gap up, through my stops and cause a catastrophic loss. So I settled for a few scraps here and there and ended up +18 at 1 contract. Which isn’t all bad, but looking all that was on the table, it was not what could have been done, just the same, I was happy with my trading.
In a panic market like this, support and resistance were not reliable, nor were any oscillators, at least not with any consistency. It was trading off the cuff, which is not really my style. It was a day that the market romped out of control. I would look for more of this in the coming days as the bailout bill works it’s way to the Senate and then probably back to the House. It should provide some interesting financial pyrotechnics.
