To say that there has been volatility in the stock market as of late would be the understatement of the decade. Volatility is always an element of the trading game, but it has been surging as of late, and it doesn’t appear to be abating anytime soon.
Traders don’t seem to know which way to take the market in a news cycle that is full of new headlines seemingly every hour. There is a lot of fear in the market related to the spread of Covid-19 throughout the world, but there are very few answers as to which direction the market ought to move as a result of it.
CNBC points to the fact that the stock market futures, an early indicator of where the market may trade for the day, have been swinging wildly overnight nearly every night for the last few weeks. The overnight markets are thinly traded anyway, and this can make them prone to big swings up or down, but lately they have been on a real roller coaster ride.
The scope of the spread of Covid-19 and what it will mean for the US and world economies at large is still unknown. People are making their best guesses right now as they attempt to position their portfolios to take advantage of whichever way this one is going to go. There is a strong likelihood that some people will be out of position in a big way in either direction when this whole thing shakes out.
Markets always focus on multiple concerns at the same time, and another concern that they have is an ongoing oil trade war between Saudi Arabia and Russia. The two countries have been butting heads over the price of oil and levels of production. That along with a lack of demand due to many people being quarantined have sent prices through the floor. Traders have to adjust to that as well and figure out what they can do to make sure they aren’t holding any positions that are overly sensitive to the changes in oil prices.
There is a lot more going on in the markets right now than what is typical. The most seasoned traders have seen unusual times like this before, but those who are newer to trading may not have. It is always best to speak with an expert before making major moves in the market to get their thoughts on what you should do.