Recap of Great Day in the Stock Market Yesterday

Yesterday was a great day on the stock market, with the DJIA rising over 300 points by the end of the day – but trading was very choppy. It should be noted that the bulk of the gains came after the earthquake which came just after 2pm and resulted in building evacuations and other “distractions” for lack of a better word at the financial center of the world on Wall Street.

I’m seeing forex markets looking risk off in early trading, corresponding with the falling indexes out of the gate this morning. It should be noted that forex markets flipped positive (risk on) to negative (risk off) several times during the session yesterday after the strong open. This followed the steady fade we had on Monday after a gap up at the open.

It’s nice to have some insight via the forex markets as to what is going on relative to equities. Stocks are muddling about yesterday’s close at today’s open. We’ll see if the forex markets find some resolution leading up to this Friday’s important speech from Fed Chairman Bernanke. I have a feeling we’ll continue to see choppy trading right up to Friday. I think most economists expect the Chairman to announce further quantitative easing in the form of keeping long term rates low and raising short term rates.

One thing for sure is that anyone who bought gold Monday is in a boatload of pain now in a quickly sinking ship. Wonder what did in all the momentum in the precious metal. Perhaps a fairly sizeable but weak short was forced to cover then watched helplessly as his positions were liquidated only to have the price immediately fall back to levels of a few days ago? Who knows – that’s the danger of big leverage in trading. If you’re wrong by enough (even with relatively low margin) eventually your position can be capsized. That’s my best guess as to what happened with gold prices this week – as we’re again seeing them in freefall today. I probably should have snapped up one of those short gold etfs or something but I’m just not that tapped into the precious metals market to know the real scoop, ya know? (editor’s note: Zerohedge reports margin requirement hikes in Shanghai likely cause of Gold price drop. More info on understanding margin and leverage)

I hope for all of our sakes that whatever he does it works better than the last round of QE.

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About S Wise

I teach others about the various uses of binary options as part of an options trading strategy. Learn to make money trading options and increase the performance of your portfolio without inducing excessive risk.
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