Are Extreme Moves Part of the Markets Now?

So you sat there in front of your screens, regardless of market or symbols, all day, watching absolutely nothing happen. When all of a sudden from the clear blue sky, price action fell off the bottom of your charts but before you knew it, flew right back up again.

I saw pretty much the same things, too.

Actually, I had long before ceased trading after taking zero TF or ES trades and one CL trade that cost me -10 cents. There simply wasn’t anything signaling an entry, anywhere. So I left the office, went outside and enjoyed the 70F sunshine for a (welcome) change. The lawn mower makes its first annual appearance on Friday. There was some lawn clearing manual labor to be done beforehand, today was a great day for that.

But I soon discovered that being recently ill took its toll on my stamina. I found myself getting tired out way sooner than usual. So I took a few intermittent breaks from lawn cleanup detail with a tall iced tea in the office. During the last of those brief breaks, I noticed the CL charts go from flat channels to CM Pattern sell-signal confirmed. Down -10 cents for the day on a single turn, I figured what the hell, might as well stick a contract out there short and see what happens.

The trade sat there for a few minutes and so did I… sipping my fresh brewed ice tea and reading the latest NFL draft info on ESPN.com. Stops were in place, worst-case scenario was another -10 cents out and no big deal.

Suddenly, CL price action began to buzz on the dome as eminis started to drop, too. An hours-earlier CM Pattern sequence on a TF chart also confirmed thru the breakdown, so I hit that with one contract, too. The moment it filled was almost the same moment it stopped out because price made one last little spike up before it dove. By then the CL was already gone and eminis were quickly following suit.

As price dove for obviously news-driven reasons, I knew from plenty of prior experience that these type of abrupt moves often snap back in a hurry. So I chased trailed-stops down +10 ticks at a time on each symbol until both stopped out near lows.

Soon after that, price action exploded back up to return from whence it came and everything returned to the way it was before: flat-lined comatose dead.

Had I been healthy and not recovering from illness, I would have remained outdoors all afternoon. Had I shut down the trade domes as I often do, there would have been no time to execute trades. Had I merely been in the kitchen, the bathroom, answering the door with visitors or any of a hundred other distractions, there would have been no trades.

It all happened just that fast. If not faster.

By no means is this the first “flash-crash” type of move I have traded thru. Not at all. Nor will it be the last time we see extreme violent moves erupt from out of nowhere in the markets. Sometimes you catch them, sometimes you don’t.

Today, I did

For more daily updates from Austin, visit his blog at Coiled Markets.