The ugliness of this stock market continued Thursday as the Dow shot up by 300 points and then collapsed to down 249 points in the final hour. All three major indexes were erratic throughout the day.

This intraday chaos revealed the moodiness of traders still not convinced that the stock market is in sync with the U.S. central bank’s commitment to extend the inflation battle.

And pro traders are expecting more of the same.

‘Insane’ stock market moves plague traders

The team at Simpler Trading is working the stock market cautiously because just stepping out for a cup of coffee is enough time for price to reverse on any position.

“These big, intraday moves are insane,” said Bruce Marshall, Senior Director of Options and Income Trading at Simpler Trading. “Yes, you can make a lot of money if you’re on the right side of the move and you get the direction correct. Or, you can get your head chopped off very quickly if you’re on the wrong side.”

Bruce, who has traded for more than 30 years, exercises diligent caution when his money is on the line in this uncertain stock market environment.

He was wary of the market starting this week, expecting a noteworthy pullback before this market can move higher, if at all.

Federal Reserve (Fed) actions last week of raising the federal funds rate by 25 basis points followed by a string of “Fed speak” during public events didn’t induce confidence across the stock market. Add in lackluster, at best, earnings reports from high-profile technology companies over the last couple of weeks and stock market participants have been hesitant the past few days.

Lack of enthusiasm among traders was born out with a down day Wednesday and the extreme ups and downs today.

The Dow closed at 33,699.88 points to fall .73% (dropping 249.13 points on the day). The Nasdaq dropped to 11,789.58 points for a 1.02% loss while the S&P 500 tumbled .88% to 4,081.50 points.

Traders must ‘trade the market we’re in’

Members of the Simpler Trading team are expecting more of the same in this stock market environment.

The market has run the course of “data influences” – such as earnings reports and Fed actions – and equities could suffer more in the near term. And, there may be more impact from the Fed hiking interest rates that hasn’t fully impacted the market.

“The Fed is going to do what they’re going to do and we just have to trade around it,” Bruce said. “We have to trade the market we’re in.”

He is not confident that the market is breaking out of the current range-bound environment and moving higher.

“I’m thinking we visit some lower levels first,” Bruce said. “We know (Fed actions) are going to slow the economy down. I’m not that optimistic that we will continue higher here.”

Bruce is watching for a solid pullback, maybe more than today, but not a crash. The key is to stay on top of market movement and not get overwhelmed by the sudden shifts.

“That’s what we have to do until the market gives us a little more clarity,” Bruce said. “Trade small. Limit your risk. Put tight stops in and you should be able to trade this market.”

More fast, furious swings could be on tap

This stock market has presented ongoing challenges to traders this year.

Bruce continues to follow his strategy of using multi-leg setups – iron condors, diagonals, credit spreads – that have proven successful this year. He doesn’t want to get too extended in any trade or hold onto trades too long because of the sudden shifts.

“Be careful of these swings,” Bruce said. “They are fast and furious.”

As earnings season dwindles and the market digests recent “Fed speak,” Bruce is cautiously optimistic that economic data reports next week may spur less reaction than before.

The U.S. Consumer Price Index (CPI) report is due Tuesday before the market opens and the U.S. Producer Price Index (PPI) report is slated for release on Thursday before the market opens.

Bruce remains focused on trading shorter time frames and taking available profits, even if smaller than in the past.