One typical nightmare for a trader!
The last hour yesterday was a fit for traders. The financial press, needing to find a reason for the sudden market plunge, wrote in today's paper that the market was "disappointed" with Mr. Greenie for not cutting more than the consensus. That's why the market corrected sharply in the last hour of yesterday's trading.
This explanation doesn't make sense to me. If the market consensus was 1/2 point, and Mr. Greenie delivered that, why would the market be disappointed?
The 80 point plunge of Nasdaq in the last hour is due to trading institutions (hedge funds) taking profit. Remember, hedge funds are not buy and hold outfits. They trade, and they trade big volumes. They can move the market, and in some cases of low volume stocks, they can make the market for those stocks in a time frame of an hour or so.
As individual traders, we suffer or benefit from the wakes of hedge funds power boats. Yesterday, hedge funds decided to "sell" on news. I felt the wake in my GX trade. GX opened higher with a 3/4 gap, and stayed above $23 up to the FOMC announcement. Then the selling began, and my stop was hit, amd it closed at $22, down 35 cents from yesterday. This situation ain't bad, compared to the $5 to $10 hit taken by other stocks such as JNPR. QQQ was also hit bad - anyone long on QQQ at 3 pm would find QQQ worth $2.50 less on closing.
Such volatility comes with the territory when one is trading stocks. Shake off the dirt after a fall, and carry on.
And talking of carrying on, from a TA perspective, filling a gap is a "failed test". Which means that the 3 day rally of GX may have been stunted due to yesterday's selling. So, we start all over again, and watch the chart, and see how the sentiment is today and in the following days to come. Will it retrace more before continuing the uptrend? We'll see...
Note: GX is holding an investor's conference on March 1. This may lift the stock higher. |
