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Great Week for Traders, But There's Been Damage

What a week! Nimble traders did very well this week, because they got everything they want — but haven't seen recently: heavier volume and volatility.

The spike in oil caused a tidal wave of selling in industrials, transports, materials, and tech, and heavy upside volume and pricing in energy stocks.

Yesterday, as oil plunged, that trade reversed: volatility declined, and bargain hunters stepped in to buy the beaten up groups.

Some traders made money three times: shorting S&P futures (or the SPY ) Friday or Monday morning, adding to the short on Tuesday, then covering Wednesday or Thursday morning.

Still, there has been damage done. Oil is now hovering just below $100, $10 higher than a week ago.

The game for next week is very simple: is $100 oil the new normal? Because if it is, certain assumptions that have been made...will have to be changed.

Many strategists have been assuming oil would be in the $80-$90 range in 2011. If $100 is the new normal, that could subtract as much as one percentage point from GDP growth, as David Rosenberg at Gluskin Sheff has noted. If WTI goes to $120, that is TWO percentage points off GDP growth.

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  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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