Another rally, another close by the heights. The stock market's inability to hold large opening gains – or major opening losses – leaves some traders a little frustrated.
S & P 500
opened heavily on Wednesday as stock markets burst out of the port, apparently on optimism linked to more sensitive headlines around trade talks in the US and China. The index managed to hold a win that ended 14 points higher than 2,651.07, a gain of 0.5%.
To Mott Capital Management's Michael Kramer there was clear evidence that "neither the bulls nor the bears are responsible", and he knows who should blame: algorithmic trade programs.
The S & P 500 had rallied against technical resistance of 2,686, he noted in a blog post, and then "there was gaping Algo's at work that brings the S & P 500 lower. is what it is, I suppose. I can not say I'm surprised. Disappointed, but not surprised. "
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gives up more than 300 points win.
See: & # 39; Sell the rally & # 39; replaces & # 39; buy the dip & # 39; as the fierce market enters the critical week
And on Monday it had been the bear's trip to feel the frustration, with shares that roared from steep loss to end a little higher, marking S & P 500's biggest one-day uphill reversal since early February.
Shares were mixed Thursday, largely withdrawn modest early gains.
Reversals have actually become more common. Data produced by Dow Jones Market Data shows that the S & P 500 has closed either 1% during its intraday high or 1% over its intraday, 76 times in 2018. It is now the most since 2015 when it occurred 82 times. In 2017, a year known for its magnificent market behavior, the phenomenon was only seen six times.
Some analysts claim that it is only a return to normalism, with traders and investors struggling to adapt to a period of extremely poor volatility.
And the market's difficulty in retaining profits may not be so unusual that it comes between a stock market sale that turned the S & P 500 back to the fix area last month. Both the S & P 500 and Dow remain in negative territory for the year to date.
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Analysts at Bespoke Investment Group said Tuesday's session marked the fifth consecutive session where the S & P 500 traded down 1 % or more from the opening level at some point during the trading day – a stretch index broke on Wednesday. The last time the shares got such a streak, was in August 2015 when markets experienced turmoil about China's devaluation of the yuan.
"We are still far from extreme levels in this stretch. Back in the financial crisis, we saw ten quick days with similar intraday sellers," they said in a post (see diagram below).
Large rallies throughout the day may also be a function of falling markets, but may be a silver liner, according to TJ Thornton, Head of US Equity Product Management in Jefferies.
"We looked back to 2000 and ranked the days with the biggest positive delta between the near and the low. You find that these days tend to coincide with the trade damper," said Thornton in a note last week (see chart below).
"In fact, they are very rare around tops, but are very common around the bottom. It does not help you to understand exactly when the bottom comes, whether it was Friday or whether it will be weeks from now, but if you wonder if the phenomenon signals something, it's more a sign of a bottom and beyond the recession, has These days tend to be high in relation to the lichens, rather than far in front of these lichens, "said Thornton.