Never trust one day's market moves 🛑
A single trading session won't tell you anything reliable when new risks emerge ✋
New questions about financial stability have markets going a bit haywire. Stocks traded higher1 on Thursday, following a decline on Wednesday, a rally on Tuesday, and a sell-off on Monday.
Any time a new risk emerges, markets will swing wildly as news develops, policymakers respond, the business community adjusts, and traders react to every new piece of information. Big up days are followed by big down days and vice versa. It’s a process that can go on for weeks.
For more on how markets react to unexpected risks, read: 2 telling charts about the stock market's volatile path📉📈
As I wrote on Sunday and Tuesday, what ultimately happens could be worse than what markets are currently reflecting. It could also be better.
I recognize that’s an exceptionally unsatisfying take. But unfortunately, this is the nature of trying to understand the ultimate implications of an unexpected market shock.
