|
By: Billy Fisher
Contributor, Stock Traders Daily
(La Jolla,
CA)
August has traditionally been a light month for trading
with volume usually kicking up in September as vacations
wind down and traders return back to the grind. This
period of transition can be an important time for
traders to seize opportunity. This autumn will likely be
no different.
After a rocky start to the year, the equity markets have
since begun to stage a turnaround. The SPDR S&P 500
ETF (NYSE:
SPY), which is designed to track the performance of
the S&P 500, has surged 49.3% since hitting a 52-week
low in early March. The tape has become unpredictable as
of late with Tuesday’s washout as SPY fell by more than
2%.
Divine Intervention
An interesting trend that has emerged as we head into
September has been the heavy volume of trading
concentrated on just a few names on the NYSE. For
instance on August 25th, an analysis by NYSE
Euronext showed that Citigroup (NYSE:
C) and Bank of America (NYSE:
BAC) accounted for 21% of the total trading volume
on the NYSE. Fannie Mae (NYSE:
FNM) and Freddie Mac (NYSE:
FRE) accounted for another 15.8%. Everything else
made up the remaining 63.2% of volume.
This realization leads one to wonder whether the recent
stock market recovery has been based on fundamentals or
merely fueled by rampant speculation. Absent government
intervention, several of the names that have been
dominating trading volume may have found themselves in
dire financial straits.
Choppy Waters
It is also interesting to note the recent spike in the
CBOE Volatility Index. This upward trend could mean that
we are heading into unchartered waters as we approach a
stretch that has traditionally seen traders become more
aggressive. It also emphasizes the importance for
traders to have adequate risk controls in place.
So what should traders expect in the days ahead? “We are
currently in the middle of the Summer Doldrums,”
says Thomas
H. Kee Jr., president and CEO of Stock Traders Daily.
“After
Labor Day, investors return-- typically with a clear
head. My opinion is, after looking at the recent rally,
that clarity may lead them to the short side of the
curve. However, we cannot be one-sided. When this
added volume comes, we must be willing to go with the
flow.”
Looking to ratchet up your trading activity post-Labor
Day? Check out dynamic real-time trading reports
published by Stock Traders Daily CEO, Tom Kee Jr., with
a Free
Trial.
In 2008, Kee’s Stock of the Week selections returned
60.8%.
|
