The Main Concerns For Active Traders – Sentiment and Volatility:
If not the top concern of short-term day and swing traders, volatility easily cracks the top two with sentiment making a strong push for the #1 spot. Without sentiment (bullish or bearish), the market wouldn’t have a reason to move to begin with, and without high volatility, the price-action wouldn’t support short-term opportunities for profits. It’s safe to say that market sentiment and volatility are necessities – and rightly so – are monitored on a daily/weekly basis by most, if not all, active traders.
Over the past week or two, we’ve actually been experiencing a rare event in the market that has never been seen before dating back at least 45 years. Thursday, July 28th marked the 11th straight day in which the S&P 500 closed within a 1% trading range – making for the “dullest” stretch in decades. This stretch has even continued into today, August 2nd. Historically, the summer months offer lower volume, often described as “calm” or “quiet”, but even still, trading ranges don’t often stay this tight. The insanely narrow window of trading is almost certainly due for a breakout – the only question active traders are asking themselves is: When? And in which direction?