Boomerang Rally Hints at Deeper Market Troubles
History suggests that such dramatic reversals happen only when something is amiss.
Is this a market reversal I see before me?
Photographer: Ian Waldie/Getty Images
Monday was one of those days. During the last two days of last week, there was a clear trading pattern — stocks rose in the morning, and then tumbled into the close as traders took the opportunity to get out. Now it was time for the pattern to invert. Stocks sold off massively at the opening in Wall Street. European shares closed down heavily for the day, but then the U.S. staged a great boomerang rally, to leave most of the main indexes higher than where they started. Some people made a lot of money. Some others, presumably, lost a lot.
Here are some brief illustrations of a day’s dose of craziness. Both the move down and the rebound were led by the most speculative stocks that have been in the eye of the storm. This is how Cathie Wood’s ARK Innovation ETF and the Nasdaq-100 have fared over the last three days: