The news: The shooting in Las Vegas, the deadliest mass shooting in U.S. history, is dominating the news cycle today, as it should.
What and why people are trading: News creates stock-market events, and there is always market movement around headlines because the bigger the news, the more they can move markets. Buried in between updates on the events in Vegas, the news stations are talking about gun stocks, gaming companies and the travel business.
Why I’m not trading any of them: It’s hard to see a material impact here. Hurricanes put billions of dollars into play, creating real business for companies. Shootings make people worry that there will be curbs placed on gun stocks, which would dry up the supply and increase demand; gun stocks typically rise briefly on news of a shooting and then fall back.
Likewise, travel stocks fall because of the worry that people will stay home – and that will hit the gaming stocks because this happened in Las Vegas – but because the shooting is an isolated, horrible event, the impact looks minimal to me.
When I would play it: I’d take the opposite side of any short-term hysteria. I’d short the gun stocks if they move too high here, and buy casino stocks if they sell off too far. I’ll be surprised if it plays out that way, but it’s smarter than chasing the news here. Let the market do what it has to do here; any trades that are worth making will come up after the initial shake out, rather than during it.
Jeff Bishop is lead trader at TopStockPicks.com. He runs short-term trading strategies, primarily using leveraged ETFs. At the time this was published on RagingBull.com, he had no shares, options or open orders in any gun, gaming or travel stocks.