What a big day! Thursday Draghi gets ECB backing for open-ended bond-buying, spurring big rally across the world. Friday job report seemed to be less concern at the moment.
* Indexes up: The NASDAQ thrust 2.2%, the NYSE composite 2.1% and the S&P 500 2%.
After one month of very tight trading range, S&P and NASDAQ finally broke out into new multi-year highs on decent volume. The futures were already flying overnight, and by the opening bell, the rally was firm and strong on spiking volume all the way into the close.
This big gap caught many traders by surprise.
Observing that AAPL was acting too choppy and weak vs. GOOG in pre-market, I decided to choose GOOG to play long along with SPY as both had nice gap-and-go intraday patterns, and the trades went well for me. I got out the positions by the close before tomorrow’s job report.
In last post, I mentioned to be cautious since breaking the tight channel could go either ways big time as many doji closes showed indecision. Although bullish sentiment improved, but short interests is near its highest level in years. Interestingly both are used as contrarian indicators by many traders, but two contradict each other. I remember that Dan Zanger used to tell us: Only price action, chart patterns and volume matter the most, and don’t make things complicated by using many indicators. It is so true!
Chasing the rally at this level is always hard to do, so I hope to see decent pullback in near future for better entries.
The best way to do deal with such market is: Be calm, think before act, have trading plan and follow it.