Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
For how oversold this market is on some secondary indicators the morning action had much to leave desired. While tomorrow is a complete wildcard due to the news event premarket, today a few scenarios could have played out for a bullish trade – (a) a big gap down leading to a reversal or (b) a regular open that was sold through yesterday’s lows and then a quick reversal back up over yesterday’s lows. Scenario b played out but really only led to a 0.4% type of gain at max.
The problem here is much as you want to see overbought conditions worked off by sideways consolidation in an up market, you do not want to see oversold conditions worked off by sideways consolidations in a down market.
A lot of sharp action in the currency markets today as well as dollar is very weak and euro and yen rally. Again the size of the moves for currencies is very out of bounds with normal times. It looks like very crowded trades are being unwound.
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