May 19, 2008; 1:45pm ET Crash

[bertg 10]

Hi, folks,

 

Market analysis seems to be the appropriate forum for this.

 

My question to all of you: what happened today at 1:45pm ET that caused the market to crash? At 1pm ET there were two reports on the calendar: 3- and 6-month bill reports, but the crash started around 1:40-1:45. I didn't see any volume spikes like I see sometimes before a big move.

 

How can all markets crash like that at the same time?

 

Thank you,

Bert

[DbPhoenix 42]

WASHINGTON, May 19 (Reuters) - A few Federal Reserve policy-makers have begun talking openly about the need to raise interest rates, but it appears more likely the U.S. central bank will stay on hold until early 2009. (1:34 EDT) more...

 

In other words, the Fed may be done lowering rates. You can see what the reaction was, though the recovery off the lows was fairly strong.

[brownsfan019 17]

The market dropped b/c the charts were screaming a drop was coming.

[Hlm 10]

The market dropped b/c the charts were screaming a drop was coming.

Yep, a little birdie told me to look for 1424's on the way down (POC of the up swing) with possible support around 1428-29s (VAH of the up swing). News just acts as the catalyst.

[trader273 10]

Hi, folks,

 

Market analysis seems to be the appropriate forum for this.

 

My question to all of you: what happened today at 1:45pm ET that caused the market to crash? At 1pm ET there were two reports on the calendar: 3- and 6-month bill reports, but the crash started around 1:40-1:45. I didn't see any volume spikes like I see sometimes before a big move.

 

How can all markets crash like that at the same time?

 

Thank you,

Bert

 

Crash:confused:??? A 19.25 range in the ES is a crash? Dont think so, nothing out of the ordinary today.

 

This is a crash:

[Hlm 10]

Crash:confused:??? A 19.25 range in the ES is a crash? Dont think so, nothing out of the ordinary today.

Exactly, we have at least a few more months before that happens.

[DbPhoenix 42]

News just acts as the catalyst.

 

And a damned fine job it does, too.

[heretodaygone... 10]

Yep, a little birdie told me to look for 1424's on the way down (POC of the up swing) with possible support around 1428-29s (VAH of the up swing). News just acts as the catalyst.

 

Hlm,

what software do you use that you can split vpoc and vvah /vval at swing points? I trade somewhat similar but a little more crudely I suppose. Because es opened above Fridays vah(1423.25) and held it then became todays val. That would make Friday's vpoc(1420.75) an unfair low.1424.25 becomes as you said the vpoc and 1429.25 becomes the vah. Also 1436.75 is now an unfair high.Thats how tomorrow setups for me.

[Guest forsearch]

Just a normal retracement from the highs. Nothing special here.

[OAC 10]

Legendary commodity trader, Larry Williams said: "Dopes Hope and Winners are Spinners"

[waveslider 10]

They've been speculating the fed is done raising interest rates for weeks now. I suspect that the tinder was dry, there was a lot of it, and then a spark came... or you could just call it a snowball.

A big hint was an attempt higher that turned into a bearish engulfing pattern on the 10 minute chart.

[bertg 10]

Thank you to those with useful answers.

 

I don't trade much because I am in the learning stages. I am taking the advice of a member here and just spend time every night watching market replay data without any indicators but volume, trying to see what price does (and also looking for patterns like butterflies and wolfe waves, which is just plain fun for me). No sim trades, just watching.

 

I just happened to see the "crash" on my lunch break at work and thought I'd ask the experienced traders here what they think happened.

 

Regards,

Bert

Edited May 20, 2008 by mister ed

[mister ed 10]

...spend time every night watching market replay data

The replay technology is very helpful isn't it? Great learning tool.

Edited May 20, 2008 by mister ed

[Guest forsearch]

Thank you to those with useful answers.

 

I don't trade much because I am in the learning stages. I am taking the advice of a member here and just spend time every night watching market replay data without any indicators but volume, trying to see what price does (and also looking for patterns like butterflies and wolfe waves, which is just plain fun for me). No sim trades, just watching.

 

I just happened to see the "crash" on my lunch break at work and thought I'd ask the experienced traders here what they think happened.

Regards,

Bert

 

Probably because it wasn't a "crash" to begin with. But keep on reading and watching those charts. You'll get it eventually.

Edited May 20, 2008 by mister ed

[Hlm 10]

what software do you use that you can split vpoc and vvah /vval at swing points?

To my knowledge there is no software out there that automatically does this...or even allows you to do this manually in an efficient way. I have spent the last several months designing and programming software to fit my specific needs.

 

I just happened to see the "crash" on my lunch break at work and thought I'd ask the experienced traders here what they think happened.

I'll try to add a helpful comment. To see where others are coming from, I suggest opening up a large tick bar chart (eg 2500 ticks) of the ES over the last 6 days (all hours). This will allow you to see the up and down waves more clearly. The last move down had more pressure because the next higher time frame has possibly finished it's up swing. The move was very technical in nature. Potential downside area would be 1405-1406. However, price is currently sitting within a decision/consolidation area. Edited May 20, 2008 by mister ed

[brownsfan019 17]

I apologize to the OP if my short but succinct previous answer did not provide an adequate reply that he was looking for.

 

Suffice to say this - as a candlestick trader, there were PLENTY of reversal signals staring you in the face (if you know what to look for). So while you are looking for waves and whatever else, a simple candlestick analysis that would take about 5 seconds accomplished the same thing for me.

 

====================

 

With that being said (I know, it was a smart ass reply) trading is one of the most time consuming and labor intensive things you can possibly do in your spare time. While there were candlestick reversal signals that met my criteria for a trade, it was not and is not about playing find a shape (which many new to candles do).

 

Hopefully this gives a little more info for you to work on.

[Soultrader 12]

Hi, folks,

 

Market analysis seems to be the appropriate forum for this.

 

My question to all of you: what happened today at 1:45pm ET that caused the market to crash? At 1pm ET there were two reports on the calendar: 3- and 6-month bill reports, but the crash started around 1:40-1:45. I didn't see any volume spikes like I see sometimes before a big move.

 

How can all markets crash like that at the same time?

 

Thank you,

Bert

 

Imo charts tell it all. Please see below a composite profile of the ES starting from 2008 till present.

 

 

 

Yesterdays high at 1441 was pretty much the top of the distribution. It will fail on the first attempt majority of the time it reaches levels like that. Check the daily charts below also.

 

 

So I wouldnt call it a crash. More like a significant point of resistance.

[OAC 10]

With that being said trading is one of the most time consuming and labor intensive things you can possibly do in your spare time.

 

Spare time? How I envy you. :\

[OAC 10]

OK, here is some candlestick analysis. In the attached5-min chart, it shows that if you missed the first move down yesterday, there was a wide range red candle where the top of the candle created massive resistance as indicated by the yellow horizontal line. Subsequently the market had big trouble going above it, then you could have shorted into the bear flag that is being formed.

[DbPhoenix 42]

I apologize to the OP if my short but succinct previous answer did not provide an adequate reply that he was looking for.

 

Suffice to say this - as a candlestick trader, there were PLENTY of reversal signals staring you in the face (if you know what to look for). So while you are looking for waves and whatever else, a simple candlestick analysis that would take about 5 seconds accomplished the same thing for me.

 

 

Could you post a chart of some of these signals?

[gassah 10]

Imo charts tell it all. Please see below a composite profile of the ES starting from 2008 till present.

So I wouldnt call it a crash. More like a significant point of resistance.

 

It also hit the value area of the upper range.

[DbPhoenix 42]

Thank you to those with useful answers.

 

I don't trade much because I am in the learning stages. I am taking the advice of a member here and just spend time every night watching market replay data without any indicators but volume, trying to see what price does (and also looking for patterns like butterflies and wolfe waves, which is just plain fun for me). No sim trades, just watching.

 

I just happened to see the "crash" on my lunch break at work and thought I'd ask the experienced traders here what they think happened.

 

Regards,

Bert

 

Bert, your question appears to have been interpreted two different ways: (1) why did price fall and (2) why did price fall at that particular time. These charts are informative and useful and helpful, but in terms of trading the move, perhaps the best you could have hoped for was to find a profitable way of entering the move, if you happened to be there at the time.

 

The averages were all at resistance of one form or another, at different levels. They were all due to fall at some time or other for some distance or other. However, absent a catalyst of some sort (in this case, most likely the comments from Fed officials), any or all of them could have simply drifted all afternoon, then plunged on the PPI data this morning. When all the major averages fall at the same time and in more or less the same way, you can assume that there is something going on outside the usual support/resistance dynamic. Noting it is important if you're studying price movement. Trading it is something else.

[waveslider 10]

I just found the reason - full moon! The moonies did it! :doh:

[OAC 10]

As I have posted yesterday in the Live Trade section: http://www.traderslaboratory.com/forums/130/live-trades-3845-17.html

 

and brought attention to the fact we were very close to the 200-day moving average of the S&P 500, a yardstick widely watched by the institutions. As you can see from the attached chart, we have problem closing significantly above it. If you do your homework every night, you would expect a tug of war around the 200ma and not be surprise by the price action yesterday.