Today’s SPI and S&P are great examples of ‘buy rumour sell fact’. Bullish in the morning after pretty much all the press was expecting Yen intervention. Then there was the announcement (shortly announced to be false). The Dollar rallied, SPI didn’t (as it had already had a great run), then the Dollar fell back as it was announced there was no intervention. That’s a negative for stocks and the index just fell for the rest of the day.

Have a think about why there would be any more than two trades today:

  1. Get long on the gap lower and ride until the announcement.
  2. Get short after Dollar/Yen drops on false announcement.

I don’t mean to be a hindsight trader here. I am just asking what will it take for us to see these opportunities and take advantage. It’s an interesting question and something to think about. It’s almost is if you have to think forward and wonder what the obvious move is going to be….