In yesterday’s recap when describing the late day selloff we wrote:
All the typical knee jerk reactions took place – U.S. Treasuries were bid up, oil and gold spiked, as did volatility etc. How much of this is real humans trading and how much is just computers trading with each other we will soon see.
One must keep in mind how computerized the market has become. When a news event hits a lot of the automatic trading goes into overdrive and there is little one can take from it most of the time. It becomes a market on autopilot. Of course if it is followed by more bad news than humans generally will pile on in the days following but as we saw today when all these knee jerk reactions happen so quickly, often we see a quick reversal soon after. Considering the market was very short term oversold per the NYSE McClellan Oscillator – we also had that on the bulls side for at least a quick short term bounce.Continue reading