When The Waters Rise

Yesterday’s (o5/23) ES session saw yet another day with zero (0) trades. Something like a 7-point total price range the entire day. Past few weeks there have been mostly 1-trade signal days, some 2-trades and some 0-trades. This was again one of those.

In years past when stock market volatility bottomed out and index futures went graveyard dead, we would simply turn to more dynamic commodity symbols and go to work there. But now in 2017, there is nowhere else to turn. Crude Oil futures, once among the most dynamic and volatile of all has been reduced to a narrow-range, chopped-up illiquid mess. The incessant two-way pounding chop negates signals or stops in both directions, equally.

Current market conditions could be labeled highly inefficient. They are all low volume, historically low ranges and volatility. In other words the function of a real “market” barely exists. Other than some big computer-algos playing chop & bang against one another, not much else is going on.

But like all extremes in life, one will eventually resolve with the complete opposite extreme. The end of this historically-dead market period will not resolve with a smooth, deliberate “normal” market. It will immediately transition into high volatility, large-range swings and huge volume. When the dam breaks, flood waters spill out.

For the first time since year 1999, I’m now fitting trade activities around my life schedule instead of the opposite. There isn’t enough of a “market” to focus on with priority. Too many days of absolutely nothing to do, from the wee hours permarket until last few minutes of (former) pit sessions.

This will not last forever. When it will end, nobody knows. When volume, volatility and price ranges return to normal and beyond, it will be time to work in earnest. When the flood waters rise, they will lift all ships at harbor. Until then, we wait for favorable conditions to set sail.

See You Inside

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