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I was watching the Spoos and CNBC yesterday, 9/16/98 (weren't we all).
The Spoos had been pretty quiet with a gradual upward drift: about 1046 at
about 1105 (EDT) to about 1054 at about 1300 (EDT). I think this
represented quiet optimism that more encouraging words were about to be
uttered about interest rates.
When CNBC announced that they had just reviewed the written version of the
prepared statements and that there was no mention of interest rates, a
downward price shock ensued. More interestingly, there was a slight rebound
and then an additional high velocity downward price move. These events were
connected with very heavy trade volume.
The initial price shock was untradeable technically by definition. However,
at least theoretically, the second downward move could have been traded
technically. However, the decision to go short would have had to have been
made on the positive velocity portion of the curve; any wait for downward
confirmation would have been too late.
Does anyone think this could have traded? Note that the order entry process
(high trading volume) has to be considered.
BTW, I took the scheduled testimony of the Dynamic Duo as an opportunity to
sit on the side lines. However, not all price shocks are so well-behaved as
be scheduled in advance.
Allan
"God does not play dice." - Albert Einstein
"But all the evidence indicates that God is an inveterate gambler and that
He throws the dice on every possible occasion." - Stephen Hawking
"Consideration of particle emission from black holes would seem to suggest
that God not only plays dice but also sometimes throws them where they
cannot be seen." - Stephen Hawking
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