The Market Meets Washing Machine Charlie

Washing Machine Charlie and the 2 AM Bandit

Euro, 5 min. bars

Something had been bothering me recently but it wasn't until I read this blog post in The Disciplined Investor, The 2am Bandit Strikes Again!, that I figured it out.  In it, TDI asks "have you ever noticed that something odd occurs right at about 2am ET?".

Well as he points out, most people probably haven't noticed, since they're asleep.  However, 2 AM is prime time for the Night Owl and as a matter of fact I have noticed.  In fact, take a look at this chart.

This is the Euro in a 5 minute chart from last night.  Notice how after bottoming around midnight, it started a gradual rise right up until, yes, you got it, 2 AM, on the dot, when it took a big dump.  All of a sudden, for no reason.

So what the heck does this have to do with Washing Machine Charlie and who was he anyway?  Well back in World War II, during the battle for Guadalcanal, the Japanese would send a lone Betty bomber over the American positions late at night, around 2AM.

The Betty bomber

The guy would drop one bomb and then go home.  The point wasn't so much to cause mass destruction as to deprive the Marines of sleep.  To add to the irritation, this guy deliberately set his props out of sync, resulting in a distinctive "wah wah wah" sound that gave him his name.

I've heard two versions of how this ended.  In one story (the one I like), Pappy Boyington, of Black Sheep Squadron fame finally had enough of this and one night climbed into his Corsair, laid in wait for Charlie and blasted him out of the sky.  The other version is that the poor guy was accidentally shot down by his own troops one night while returning from a mission.  In any case, he finally went away, one way or another.

In any case, it looks like we've got some new sort of late night raider in our midst once again.  He doesn't show up every night but when he does, he drops a bomb on the euro and on ES.  Who is this guy?  Where does he come from and what does he want?  TDI is right - there is indeed something odd going on at 2 AM.

So Charlie, you're on my radar now - I'll be watching for you next week.