If you watch the intra-day trading patterns you will observe the level of volatility or range of trading. What is interesting to me is where the futures market indicates the direction the market is at the beginning of the day, the actual trading levels during the day, and then where the market actually finishes. Today, traders thought the market should be going lower (by 100 points), it started that way, went further south until just before the last hour (down by 200+), then recovered to finish at just about where we started. It is generally acknowledged that the first half hour and last half hour are primarily institutional traders. It is known as the “smart money hour”. The rest of the day is attributed to retail trading (much of which could be day traders).
My interpretation of the day is as follows; The institutional traders were expecting another decline in national sales. The market drops by 100 - 150. Retail traders start to follow suit and continue the selloff. The market is down by 220 at 3:00 p.m. The sales number comes in at up almost 1% (preliminary report mind you). The institutional traders turn the market around and by the close we are were we started. They called this 1% jump the largest jump in sales in 14 months. But, after the figure is revised downward as they often are, it will become an almost meaningless statistic and the trend will continue as before maybe just not as bad. For now, it can be interpreted as a preliminary slowdown of bad news with the possibility of the end of the bear market. Yeah, right!
Original source: http://fundswitchers.wordpress.com/2009/02/12/intraday-stock-trading-pattern-institutional-vs-retail-traders/
