Unless you're a day trader it's tough to trade when the Dow Industrials Average experiences not one but three triple-digit swings in the same day. That doesn't mean day traders had it easy. It can be nerve-racking trying to catch the intraday swings.
The DJIA saw its +260-point rally this morning reverse into a -306 point drop from its highs and then reverse again with a +188 point bounce late in the day.
The positive news out today was Germany's successful vote to expand the EFSF bailout program. Plus, the U.S. Q2 GDP number was revised higher. Then the weekly U.S. jobless claims came in less than expected.
On the other hand the market reacted negatively to an earnings warning from semiconductor company AMD. Plus, there were renewed concerns over economic challenges in China (these concerns ebb and flow quite a lot).
You could argue that traders are confused with all the back and forth volatility. Meanwhile I don't trust the late day bounce. It was probably fueled by end of quarter window dressing since tomorrow is the end of the third quarter.
Looking at the market today the weakness in the semiconductors and retailers is bearish but this was offset by strength in financials and transports. The question is, will investors be buying stocks heading into the weekend? Or will traders be selling stocks because they are afraid of the headline risk over the weekend?
There is too much volatility and tomorrow could see more end of quarter window dressing. We are not adding any new trades tonight.
Look for new trades in the weekend newsletter!