Trump Media & Technology stock -- aka Truth Social -- had been on fire, leaving many wondering whether the market knew something about the outcome of November's presidential election. Not likely. Recent price action says more about traders than it does about politics.
Tuesday’s gain leaves shares up about 84% over the past month.
Coming into Tuesday's trading, DJT stock had gained 67% over the past month, and time will tell if the move is really "correlated" with the election results. Investors, for now, shouldn't read too much into who's buying DJT and how buyers are positioning themselves headed into November. Simply put, Trump Media stock has become a trading vehicle, and the traders who own Trump Media stock won't be the ones owning it in a matter of days.
Coming into Tuesday's trading, about 223 million Trump Media shares exchanged hands over the past five days, according to Bloomberg. Including Tuesday trading, the number jumps to about 320 million shares. There are only about 87 million shares of Trump Media available for trading.
All the shares available for trade have changed hands multiple times over that span. The average holding period for people buying Trump Media stock in the past week is less than two days. That is very unusual. It takes Apple stock more than a year to complete turnover.
People are trading Trump Media shares -- hard.
The why is no mystery. Volatility attracts traders. It's the lifeblood of trading gains. Trump Media shares have been exceptionally volatile lately. Shares have moved an average of roughly 7%, up or down, over the past month. The average for Apple is about 1%.
Tuesday was extreme even for DJT. Trump Media stock opened up 7.5% at $32.19, and traded as high as $33.85. The gains faded and the stock closed at $27.06, down 9.7%. The S&P 500 and Dow Jones Industrial Average both dropped about 0.8%.
For now, what investors are sure of is that volatility and volume have picked up in Trump Media stock ahead of the election. Investors might want to look at more traditional polling metrics to get a sense of who will win the White House on Nov. 5.
Leave DJT to the traders.
