Fewer traders, bigger moves — a thin August tape amplifies the analyst calls

Although market activity has dropped off a bit here in mid-August, the decreased participation has amplified the effect of analysts’ calls. Not every trader has left for the Hamptons. Those who remain are now focused onto fewer targets. A significant analyst call in this environment can move a stock more than it otherwise might. For example, Wayfair (W) is up $4 premarket on an upgrade at Bernstein. White House tariff action on foreign drones is moving U.S. drone makers higher. These moves are likely more exaggerated than they would be in a normally attended market. Experienced traders will likely be cautious of chasing the action at the open.

We have outlined on the Kapnotes trading board a few opportunities to (carefully) fade some of these exaggerated moves. Patience pays, though. Experienced hands will wait-out the opening froth, engaging after the frenzy has run its course.