Some sources attributed yesterday’s dramatic swoon to tidbits of news during the day concerning Greece. We know better, however: It was simply mechanical opportunism, driven by algorithms that act like a bloodhound’s nose when the dog has been set free in an abattoir. When the final bell rang, the Dow had risen 93 points after being down 218 intraday. There were no important headlines driving this hysteria, so it must have been the quants. Where to next? The rally was bullishly impulsive on the intraday charts, although not on the daily (see inset). If there’s an ‘easy’ trade to be culled from a pattern like the one shown, it seems all but given that the crucial price swing will occur around 4 a.m. Eastern. That’s what the stock market has been doing for months, even if yesterday’s low, which occurred at noon, was an oddity. For trading purposes, you can use E-Mini Dow futures. _______ UPDATE (10:29 a.m. EDT): Suh-prize suh-prize: The E-Mini Dow made its low at 4 a.m. Since then, all of the action has occurred gratuitously, within the high and low of yesterday’s range. Wake me when it’s September.
