It’s A Market For Hedgies And Trading Desks To Play With

As long as we continue to have 2-4% intraday trading ranges as routine the environment will only be safe for day-traders. Today (Tuesday) featured another whiplash as stocks fell sharply early, camped lower, reversed course and then reversed again. It’s enough to send investors to the chiropractor.

The open lower this morning followed more bad news and sentiment regarding earnings. But volume was relatively light and we remained camped lower. Then with news pending regarding mortgage restructuring from Fannie Mae (FNM), Da Boyz decided to press things early and caused a healthy ramp just before that news. Further there was some floor talk that Blackrock’s holdings of Bear Stearns toxic mortgages wouldn’t be as bad as feared. Want some?

But reality settled in and Da Boyz reversed course just as folks were getting excited and invested no doubt. It’s a market for the hedgies and trading desks to play with.

While volume increased today most of it came during the whiplash beginning around 1:45 and lasting until the close. Breadth continues to be poor.

And, this data just in, courtesy of blog reader and subscriber David Hurwitz.

That wraps things up for this whip lashed trading day. Da Boyz had fun pushing each other around after lunch. When volume shrinks as much as it did today, those sitting on trading desks with large sums to trade can really get things going to suit their short-term needs.

But, this is only a market for them since normal position traders can’t hold on using reasonable stops with this much volatility.

We’ve posted our portfolio returns for October and our year-to-date returns from conservative to more aggressive portfolios are 3.89%, 5.49% and 9.09%. Naturally, some individual ETFs have performed better or worse. These results may seem a pittance but dare I say it’s “relatively” better than conventional performance from most managers?

Anyway, now we’re just lying in the weeds and waiting whatever next opportunities may be present. But, one thing is certain: volatility and lethal intraday action must calm.

Let’s see what happens.

Have a pleasant day and let’s honor those who have served.

Disclaimer: The ETF Digest has no position in any of the highlighted securities.

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