I am following this development with great interest as I have never seen anything like this before. At the very least, I don’t recall seeing this before. The market has opened with either a massive up or down gap, 9 out of the last 10 trading days.
Further, we have had a substantial gap, up or down, in all of the last 7 trading days. In 6 of those instances, the market completed 75-80% of its entire daily move in the aftermarket. And unless you trade futures, it is very difficult to take a position.
What does any of that mean?
A few things. First, we are definitely operating at a higher energy level. Second, this is a very dangerous market. And whether you are long or short, your profitable position can be very easily retraced by the time we open the following day. Finally, short-term trading positions are unlikely to work if such an environment continues. In other words, it would be wise to pick a long-term directional move here and stick with it.
Just make sure you get the direction right.
