With so much wild movement each day and week there is no doubt the average investor/trader gets quite nervous over each outcome.
Just last week we had a day - Monday - where no news came out to hit stocks but they were bludgeoned, perhaps in preparation for the worst to come from Chairman Powell and the November jobs report. No bid whatsoever, and a retreat back towards 4K was shocking to the recently minted bulls, who continue to look for more upside.
On to Friday, and the jobs report for November was strong on all fronts - job creation, wage growth and tightness in the labor market. All characteristics the Fed would like to see slow down, hence the immediate response of the markets immediately dropping some 1.5%. But as we are in a seasonally strong period for stocks, investors and traders are looking for the silver lining at each drop-dead moment. Yet, markets strongly rallied from the report - a good news is 'eventually' good news result.
By taking a glass half full approach it seems to be paying off well if you wait for the anxiety to subside. This is a stark difference from what we saw happen in the summer when a heavy drop early was a signal for bearish traders to pile on and drive markets down. Of course, the 'algo' traders feast on every word and send trades through without emotion, but it leaves the rest of us to figure things out and then move on.
What can you do to avoid feeling whipsawed by the wild movements?
Pay attention to volatility. It is low right now, hence the market is not expecting big moves but when they do occur like on Friday, there is a chance of a quick move back to the start.
Next, understand the conditions of the market and the time you're in. It seems most people are out talking about recession in 2023, yet the market continues to rally, up nicely in November. Is the market ignoring the signs? Possibly, but when money is flowing into stocks strongly as it is now, you don't fight the momentum.