I've heard from several traders who lost considerable coin early on this morning, assuming that the overnight weakness would follow through to today's solar daytime session.
That raises an of import trading question: what is the correlation betwixt the changes that nosotros encounter inward the overnight marketplace (yesterday's closed to today's open) together with inward the solar daytime marketplace (today's opened upward to today's close)?
Since the origin of 2009, that correlation has been entirely nigh .14 inward the S&P 500 Index (SPY). That agency that less than 2% of the variance inward solar daytime fourth dimension frame moves is accounted for past times movement overnight.
We tend to encounter trends from i fourth dimension catamenia to some other together with assume continuity amid markets. That supposition is worth challenging, however. Just because the marketplace is moving i way during marketplace hours inward Asia or Europe doesn't necessarily hateful that it volition deed that way i time merchandise inward the US of America is nether way.
With trading desks to a greater extent than or less the basis keeping upward alongside news, earnings, together with economical reports, markets are increasingly global together with increasingly efficient. By the fourth dimension a deed comes to our shores, it may hold upward former news.
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