- With market sentiment banging against all-time lows, we should not be surprised to see some rather wild swings taking place. Part of this is due to poor volume and part of it can be explained by computer trading exploiting the fear of those shorting the market.
- Going short in a market exposes a trader to huge losses, and those entering such trades tend to do so using tight stops. This means those shorting markets tend to paint a target on their back - and much of the market's rise has been from these stops being targeted and hit.
- We could be in a "realizing market," which means people are beginning to realize the market has only one way to go - and that is lower - but this does not mean money cannot be made when imbalances occur.
For further details see:
Bearish Traders Generate Wild Swings In Stock Markets