Update (6 a.m. ET): Volatility is still the name of the game… Touching positive territory earlier overnight, Nasdaq futures are now of 2%.
Is the technological carnage over? It is too early to tell too, but Nasdaq 100 (NASDAQ: QQQ) future turned positive a few moments ago, after dive up to 2% during the Labor Day weekend. Dow-related contracts (NYSEARCA: DIA) et S&P 500 (NYSEARCA: ESPION) are up 1.1% and 0.8%, respectively.
While many market participants could not identify a single trigger for the Nasdaq 6% diving Thursday and Friday valuations were stretched given its strong 75% de gain suddenly in March.
The “Nasdaq whale theory” also continues to make waves, although not everyone is convinced by the evidence. Recent reports suggest Japanese investment conglomerate SoftBank (OTCPK: SFTBY) had been stocking up on options on tech stocks in recent months and was now resting on $ 4 billion in gains. With the “now known” positions, SoftBank shares dropped by 7% in Tokyo on Monday, losing about $ 9 billion in market capitalization.
Others say that the strategies followed by institutions like SoftBank would have minimal effect on market volatility, like Benn Eifert, chief investment officer of hedge fund QVR Advisors.
He said the real power was wielded by day traders buying huge amounts of call options on tech stocks, which created a virtuous cycle of hedging and buying pushing stocks higher.
“This market is moving rapidly up and down because investors and speculators are very active and positioning is crowded,” he wrote in a tweet that explains the difference between “retail speculation and short-term purchase (Robinhood) ”and“ the institutional appeal to spread the technology professions (SoftBank, etc.). ”