Investors are ‘trying to catch the falling knife’

The stock market rout continues – so it is not surprising that the most popular market this week amongst our clients has been the NASDAQ index – writes David Jones, Chief Market Strategist at Capital.com

 
In just the last few days it has travelled through 700 points of range – a swing of more than 5%. It would seem that many investors are trying to call the bottom of the falling knife that is the plunging stock market at the moment – the high tech NASDAQ index is down by around 25% for the year to date and we are not even six months into 2022.

So far at least, stocks have yet to find a permanent base in this year’s slide and although some clients are looking to profit from the slide by short-selling, the majority are still looking to buy the bounce – but these are proving to be short-lived.

It is more surprising to see oil so popular still and in second place of the top traded markets on our platform – the last couple of months have seen crude trade broadly sideways, after the Russian invasion-inspired surge. Some clients do still seem to expect another explosion higher in the price of energies – although opinion is more split on oil than equities.

Around a third of clients trading oil are actually expecting a fall. Clearly this is still very much a news-driven market and even though the last few months have seen low volatility by recent standards, any developments in the Russia/Ukraine war can change sentiment very quickly – in either direction.
 
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