There are lots of reason for stock market volatility right now. It has caught alot of traders unaware, Here are the top 3 top reasons for stock market volatility in late in 2012 :-
1) The 2012 U.S. Election campaigns are upon us. Traders are not thinking rationally, and are caught up in the hype and hysteria going into the November elections. Some traders are even investing patriotically, meaning they are just buying up everything blind folded without looking at a chart. This can create sudden movements out of nowhere, and even movements after hours that do not normally occur.
2) August is notoriously known to be a quiet low volume month, and professional traders worth their salt are away in the Hamptons on holidays. September is known to be one of the most volatile months on record as the big boys return to their desk and start to trade the market again. Increasing volume and larger shifts of money creates "free flowing" movement on the market and thus increasing volatility significantly.
3) The last 3-4 months of the year program algorithm trades tend to be large and more domineering. That means that if large sell stops or buy stop orders sitting in the market are triggered it tends to set of a domino type situation where quick market upswing or downdrafts can occur.
All these are contributing factors and reasons for stock market volatility as of late. So sentiment trader is here to say expect more of the same going into the end of 2012.
If we have a look at the market leader or the DOW JONES TRANSPORTS Chart (or the leader of the market) we can see in the last few weeks just how volatile the market has been, and how it has tricked traders.
As you can see there have been breakouts, and fakeouts, that got the bears excited, but the Transports remains in a range for now. The plan with our VIP MEMBERS still remains the same.
WHAT IF YOU KNEW WHICH WAY THE MARKET WAS ABOUT TO MOVE BEFORE IT HAPPENED? CLICK HERE To Join Our VIP ELITE GROUP -- 30 Day Trial Offer Today!