Blame the beach for this trading pattern
If you've wondered why trading during volatile periods like this seems unusually concentrated in the "FANG" stocks (Facebook (NASDAQ: FB), Amazon (NASDAQ: AMZN), Netflix (NASDAQ: NFLX) and Google (NASDAQ: GOOGL)) and other big favorites like Apple (NASDAQ: AAPL), you can blame the beach.
Remember that it's August and a lot of people are on vacation. They're not sitting at their Bloomberg terminals with hundreds of stocks on their screen. If they're checking the market at all (I know I would be if I were on vacation this week), they're doing it on their mobile phones and only looking at a handful of stocks that they either own or want to buy or sell.
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" Fast Money " trader Jon Najarian said that when he's on the road, it limits his stock following - and subsequent trading action - to a smaller subset of names.
"When markets are moving, my only screen is my iPhone and I'm looking to buy on a big drop or sell into a big rally, I know the universe of stocks I can follow is much smaller ... I'd guess it is one-quarter to one-third of the amount of stocks that I can scan on big screens in the office," said Najarian, who estimates that he spends about 40 percent of his time on a mobile device.
Guy Adami, another "Fast Money" trader, said he uses his smartphone to check stocks about 60 percent of the time. He estimates that the stocks, indexes, currencies, etc. that he tracks on his phone are less than 15 percent of what he follows on his desktop.
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In a very informal and highly unscientific poll that I conducted on Twitter (NYSE: TWTR) and among retail and day traders in my network, most of them kept a smaller universe of stocks that they checked on their phones. And with the big momentum and "popular" names popping up on the majority of those lists, you can infer that during vacation time, especially when there are big moves in the market, the more popular stocks are getting more attention. That will continue to add to volatility for those names.
If you have a lesser-known stock that doesn't seem to be getting the investor love, well that may just be because there's no room for monitoring it on smart devices. That may just provide an entry point for you to suss out a small- or mid-cap stock now that won't get the attention it deserves until after Labor Day when investors get back to their desks!
Commentary by Carol Roth, a "recovering" investment banker (corporate finance), entrepreneur/small-business owner, investor and author of "The Entrepreneur Equation." Follow her on Twitter@CarolJSRoth.
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