Most traders I know, including me, will start the day by figuring out which way the market will be trending during the day. A part of that planning will involve looking at what happened during the overnight sessions in Europe and the US. As I have been saying last week getting bullish or bearish on the overnight moves to me seems trading by looking in the rearview mirror. If you are getting bullish/bearish on an intraday basis or even long term, based on the overnight gaps you would be placing bets that are baked into the market right on the open. Since January 05 the SPI has gained a sum total of only 241 points during the day trading session. While the market has gone up 2500 points!!! All of the gain has come in the overnight gaps. Most of the day moves are filling and fading around the general trend i.e. Bullish since January 05. If you are a longer term trader reacting to overseas moves is going to just shake you out of the trend and make you place bets anticipating a short term move that is not going to play out during that day. So don't flip your trades if the longer-term trend is in your favor. If you are a long-term trader you get rewarded for the added risk of holding overnight. But for an intraday trader it seems that in a raging bull market the trend is someone else's friend. Buying the open and selling the close would have you up only 241 ticks, less brokerage, in two and a half years. It is obvious from this that a daytrader needs different strategies than the trend in an end of day chart. I will have an example later today and more in the coming weeks on this data.
Here is the SPI200 data I used with a contract roll over two days before expiry.
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