Good morning. On May 6, 2010, the infamous Flash Crash briefly erased nearly $1 trillion in market value in minutes before recovering. Some stocks even traded for a penny or $100,000 a share during the chaos.

It was a reminder that in markets, liquidity can vanish faster than logic.

-Shaun A, Jonathan Kibbler, Jordon Mellor

MARKETS

How’s your favorite today?

Prices supplied by Google Finance as of 4:00am ET - stock prices as of close. Here is what the prices mean.

MINDSET

Is the Monday Effect Still Real in 2025?

Mondays have a reputation in the markets. Traders call it the “Monday Effect”, the idea that stocks often underperform at the start of the week compared to other days. While the pattern isn’t as dominant today as it once was, it still lingers in trader psychology and sometimes creeps into price action.

So why does Monday behave differently?

Here’s what you need to know and why it matters:

1. Weekend Risk Reset

credits: Somyot Techapuwapat / EyeEm / Getty Images

Markets don’t trade on Saturday and Sunday, but the world doesn’t stop spinning.

Political headlines, global events, or surprise corporate news can build up over the weekend. When Monday opens, investors rush to price it all in at once. That often means a wave of selling or cautious positioning at the start of the week.

2. Institutional Flows and Portfolio Adjustments

Big funds tend to rebalance after the weekend.

If risk managers want to reduce exposure or lock in profits, Monday morning is their first chance. This can skew returns lower compared to midweek sessions, where fresh flows are less about “catching up” and more about new positioning.

3. Trader Psychology and Sentiment

Mondays also carry a psychological weight. Retail traders in particular often come back more cautious after two days away, especially if Friday was volatile. That hesitation can suppress buying pressure, while professional desks take advantage of weak sentiment to push prices lower before volume stabilizes midweek.

4. Evidence and Evolution of the Effect

Academic studies dating back to the 1970s showed that average stock returns on Mondays were significantly weaker than other days. Some called it the “Weekend Effect.”

Over time, markets have adapted. With 24/7 news, faster flows, and electronic trading, the anomaly has faded. Still, pockets of it remain, especially after turbulent weekends when headlines pile up.

Here’s the Takeaway

The Monday Effect isn’t a surefire strategy, but it’s a reminder that psychology and timing matter in trading. Mondays often reflect a mix of weekend news, institutional flows, and cautious sentiment.

For us traders, the lesson is simple: don’t overreact to Monday moves. Instead, use them to spot where fear or hesitation might be creating opportunity. By Tuesday and Wednesday, markets usually settle back into their natural rhythm, but Monday can give you the first clues on how the week might play out.

-Shaun A

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FOREX

Is EUR/USD Heading for 1.20?

Fed Chairman Powell stirred up the forex pot and sent the USD lower on Friday after his comments at Jackson Hole. But the narrative for the USD remains bearish. This could bring some fresh ideas to USD pairs, which every forex trader should be interested in.

Powell’s Telling Us Where to Look

He has changed his mind on what is the biggest concern for the US economy from inflation to jobs. He stated “jobs are the bigger concern” which makes the next NFP release on the 5^th September very important.

This statement has traders betting on a September rate cut, and the USD is seeing a fresh round of selling. The odds have changed slightly with the CME FedWatch Tool changing from an 86% chance of a cut down to 75%. But for us retail traders (mere mortals) rate cuts = weaker dollar, and it means we can look at opportunities to short it against stronger currencies.

Playbook 1: EUR/USD to Run Higher?

The Eurozone has been experiencing stronger fundamentals since the beginning of 2025. This combined with the poor USD fundamental drivers has seen EUR/USD form a strong bullish trend.

Positioning from the hedge funds show an increase in long contracts, but we are heading back towards the extremes we saw in early July.

I will be keeping an eye on the lower time frames here, if we get decent pullbacks into levels of minor support areas, I will be looking to take longs up to the 1.2000 levels.

Playbook 2: AUD/USD extreme positioning

I must admit that AUD/USD is one I am watching very closely.

As talked about in a previous post the Commitment of Trader reports show an extreme short position being held by the non-commercials. We can often see these positions unwind quickly. If this narrative holds with the USD weaker fundamentals, then we could be early to this AUD/USD move.

As we can see from the weekly chart, and the CoT reports the 0.6400 level could be the point where buyers want to defend. A break above last weeks high could be the trigger point for most, and again I will be watching the lower time frames for opportunities.

We must be warned

If the market is holding out for some poor NFP data and we don’t get it, then the pricing in of a cut by the Fed may shift dramatically. That’s the one warning we need to focus on here. This could be one of those situations where we price in cuts, but one strong jobs number could derail the whole thing and the next thing you know, cuts are off the table.

So, in that sense, please remember that risk is the most important factor when it comes to trader, just because these positions to me make sense, doesn’t mean I will risk anything out of the ordinary on it.

-Jonathan Kibbler

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