January 7, 2009
While the opening minutes of trading is dominated by retail investors reacting to morning news, it's the close of the session that matters more. That's when institutional investors who have spent the day digesting the data and headlines stake their claim. If avoiding getting blindsided by news from Europe is the reason for the dislocation between the open and the close, it suggests additional caution by traders, who remain concerned about what is called "tail risk" - the unknown surprise factor. "We could have a huge downdraft off the simplest bad news," said Brian Battle, vice president of trading at Performance Trust Capital Partners in Chicago.