Stocks fell sharply today as two economic reports fueled investor’s concerns about the economy. The general sentiment of the market moves most sectors and even stocks that show great strength will turn negative or just be slightly positive. Sentiment rules the market
Sean Seshadri states that it is paramount that investors follow judge the sentiment of the market as it will affect stock prices and other markets in general. The Dow Jones fell 144 points as investors sought refuge in bonds. The first report at 830am from the Labor Department said claims for unemployment rose which caused the market to move lower.
At 10am Philly Federal Reserve said manufacturing activity fell since August which increased bearish sentiment. Lux Investments wants intraday traders to be prepared for economic reports that can move the market.
Tech stocks moved lower including google which went down 14.18 or 2.94 percent. Investors who shorted google would have benefited from buying put options which went up over 500%. The option ranged from 55 cents to 5.00.
With options, Sean Seshadri states that one does not need a large amount of capital but has to understand the components that make up an option in order to trade it correctly.