Nervous Markets

It is amazing how nervous market participants are. Yesterday, the S&P 500 took a 25 point dive on fears that China would sell its Eurozone debt holdings. As I pointed out yesterday, that simply is not going to happen and I believe it was pretty obvious. Overnight the Chinese affirmed that they are not selling and the markets are trading back at yesterdays highs.

Microsoft's CEO made some macroeconomic comments saying that its possible that Europe's problems could spread. Microsoft's stock was promptly hit up for 4%. Reactive traders are getting punished while those who stay calm are seeing opportunities. This is the opposite of the momentum market we have been in. Could we finally be seeing a two way market or is the market just trying to shake out the renters before another momentum move?

1 comment:

PJ said...

It's crazy, I think the high-frequency trading computers must have something to do with it.

This kind of market makes the computers lose money, since most have momentum algorithms, so we'll probably see more choppiness until they adjust the algorithms.