The Wall Street Journal notes that the day traders have returned. Not in the same size and scope as during the bubble heyday, but in sufficient force to prompt Fidelity to cut trading prices to just $8 per trade for its most active clients (240 trades per year or more).
Not quite a contrary indicator, but certainly a warning sign.
I do not believe this has much value as a specific market timing signal; However, it an ominous dark cloud on the distant horizon. For those who consider the Macro environment, this is yet another important sign that all of the speculative excesses has yet to be wrung out of the markets.
Here’s an excerpt:
Fidelity — one of the nation’s biggest discount brokers as well as the largest mutual-fund company — reported 59,976 average daily trades in August, up 16% from the same month the year before. Two big rivals, Ameritrade Holding Corp . and E*Trade Group Inc., have both announced recently that trading activity in September is up 30% or more from August.
Fidelity said Monday it would cut the commissions on stock and options trades almost in half for those who trade at least 120 times a year. Those customers will pay only $8 a trade. Fidelity’s best commission rate was previously $14 and available only to customers that traded 240 times a year or more . . .
Analysts say that day trading correlates strongly with the technology-focused Nasdaq Composite Index, which is up 64% since hitting bottom last October. Charles Biderman, chief executive officer at TrimTabs.com Investment Research, says much of the quick buying and selling is focusing on the same sorts of technology and Internet stocks that populated accounts during the late 1990s. Starting in 2000, many of those investors lost fortunes, and many of the firms that egged them on have now shut their doors.
Day Trading Makes a Comeback And Brokers Vie for the Business
by John Hechinger and Jeff D. Opdyke
Staff Reporters, The Wall Street Journal