Yesterday, after the ugly reversal of Tuesday's gain, I commented that the market was "ill." After the action today, I have to amend my opinion. I now believe that this market is downright insane. There is simply no logic to the swings we are seeing day after day.
The only way to deal with this crazy market is to be a trader with a time frame of a few hours. The action is so arbitrary from day to day that anyone, both bulls and bears, are painfully whipsawed should you decide to build positions and look for momentum to continue in one direction for a few days.
We had a lot of unusual action today with rebalancing, option expiry and what looks like macro fund moves. Volume picked up quite a bit as a result, but there is a lot of artificiality to some of the moves, and they could easily seem to reverse next week.
Like many other trades, the wild swings have left me exhausted. It has been an awful lot of work this week to rack up some gains and hold on to them. I suspect that things will continue to stay tricky for a while as the bears and bulls continue to battle back and forth. Enjoy the holiday weekend. I'll see you on Monday.
Rev Shark Blog Regional Banks Vaulting 3/20/2008 2:26 PM EDT This action smells like a macro fund buying a basket of these smaller banks.
Rev Shark Blog More Troubling Inconsistency 3/20/2008 1:53 PM EDT The market's vacillations are undermining stock picking efforts here.
Rev Shark Blog Major Trend Still Down 3/20/2008 12:18 PM EDT Retail's a bright spot, but it's important not to be too trusting.
James "Rev Shark" DePorre is the author of Invest Like a Shark: How a Deaf Guy with No Job and Limited Capital made a Fortune Investing in the Stock Market. He is founder and CEO of Shark Asset Management, an investment management firm, and he also operates sharkinvesting.com, an interactive online community that serves and educates active investors. DePorre holds business and law degrees from the University of Michigan, is a member of the Michigan Bar Association and a former tax attorney and CPA. He lives in Anna Maria Island, Fla., with his wife and two children. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Rev Shark appreciates your feedback; click here.
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