Briefing.com just posted a note about how the market feels this morning:
Floor Talk: Feel of the marketProbably the best word to describe this morning's opening rebound was "tentative." For months now it seems that everyone had expected the market to correct, only for it to keep marching higher; however, while yesterday's sell-off wasn't completely out of the blue -- especially given Monday's ominous action -- yesterday's intraday gap down in the Dow was certainly a surprise. This morning, although we saw an initial gap up in many names, there doesn't appear to be a surplus of eager buyers out there, while those looking to fade the gap up are feeling some hesitation due to the near-term oversold nature of the market following yesterday's ~3.5% drop in the indexes (which followed 4 consecutive down days)... In short, it seems that we got a decisive shift in sentiment yesterday that now favors a more cautious stance, although despite the magnitude of the sell-off yesterday we really didn't feel a sense of panic -- especially once participants realized the Dow's intraday gap down was due to a computer glitch. Perhaps the best way to sum up the approach of many traders this morning could be "wait and see" or "discretion is the better part of valor."
Sounds about right and jibes with what I wrote this morning. I'm in no rush to get long. Buyers have picked up the pace over the last 15 minutes or so but for now I'm just looking at this little move higher as some nice upticks for the bears to reload into.
Oh yes, the extreme bullish sentiment has been worked off and today bears get a chance to unload their positions otherwise a rally could deplete the implied volatilities pretty swiftly. I wouldn't be surprised to see Dow close 200pts up especially after Bernanke's comments to the House that everything is as was before and he doesn't know of any "trigger" for yesterday's drop. He is doing a good job of reassuring markets.
Hi Mike, just a newbie question:
I've noticed during the last couple of days the volatility of individual stocks increased substantially, which is understandable due to the huge jump in the VIX.
However, what I couldn't figure out was the fact that the intraday volatility of NYSE stocks seemed much higher than NASDAQ stocks these last few days (I thought it's the other way around, in general.)
When I drilled down to small time frames, 1-5 minutes (esp. 1-min charts) I could see that each candle in NYSE stocks mostly had large wicks (both up and down.) For example, today, in stocks like GS, ICE, LVS, ATI, FDX ... the difference between highs and lows of the 1-minute candles in these stocks sometimes could be up to $2!
On the other hands, NASDAQ stocks such as GOOG, AAPL, RIMM, BIDU looks pretty much the same as usual, maybe just a bit more volatile, but not to the degree as observed in NYSE stocks, i.e their candles looked much "cleaner".
I wonder if this had something to do with NYSE specialist tactics in volative market condition such as that of the last few days? Your insight is greatly appreciated.
Ken,
I think you nailed the reason. Traders have long complained about the way stocks trade on the NYSE and have often blamed it on the specialists. I don't know how much of it was ever true. I I don't know if the specialists still have as much power as they once did given the NYSE's new hybrid system. But I do know that NYSE stocks seem to be a lot trickier than Nasdaq stocks on an intraday basis.