Pity the professional trader, who has to come in every day and put money on the line. You can't help but sympathize.
On Friday, traders went from complacent to a mild panic, from not caring to buying volatility, essentially shorting the market. Then, on Monday, traders reversed and essentially covered their short positions. All in two trading days!
What a ride! S&P futures fell 50 basis points on Friday and were down 30 points pre-open on Monday. They are up roughly 35 points Monday.
An old trader friend of mine called to vent his frustration this afternoon. This is a man who has traded professionally since the early 1970s (with both Merrill Lynch and Morgan Stanley) and traded his own money for the last 15 years.
"How do you trade when the S&P goes down 50 points on Friday, drops 20 points pre-open, then rises 35 points on Monday? How do you trade when one important Fed member says they want to raise rates on Friday, and then on Monday another important Fed voter says they likely will not raise rates?"
The short answer is, you can't.