Actually a bad post, sometimes I vent when I shouldn't. <g>
Anyone trust this rally off of the 10K level? Was this staged or what, we hit 10K almost on the nose then the biggest buy program I have seen all year takes the TICK up 1000 points for a huge white candle on the 6 minute bars.
I wonder how long they can defend this level. They sure don't want J6P coming home from work and seeing the DOW in 4 digits this weekend. <GGGGG>
Well I am finally caught up with all the posts here. Monday continuation or PPT bail out for a rally Monday?? MArket moving so fast I can't even plug numbers into my system to see what signals I am getting.
Timber Bear - I was going to write this in response to your post but couldn't get SI to accept posts at all.
Basically my point was that the big money/funds hedge thier bets. If the go
long a few billion in stock, they buy index puts to protect some of thier
backside. Now when they lose, they lose billions still but percentage wise,
they are profiting from the loss through thier puts so the percentage loss
is not huge, just the dollar value. Now to cover thier losses, if they have
to sell holdings, a few billion in sell orders puts downward pressure on teh
market thus increasing the negative movement.
J6P on the other hand buys AOL at teh top because some guy says it is a good
play. He goes all out on max margin, has no idea what a 10Q is and throws
them away unopened or else doesn't know how to read one between the lines,
nor a prospectus, has no idea when they report earnings, who the CEO is etc.
On top of that, he doesn't buy puts to protect his back side. Now when the
market drops, he loses 50% of his cash, gets a margin call and sells but the
impact of his 50K of stock is a pimple in the market.
So basically the impact of a fund on the market is bigger but percentage
wise, they are often in much better shape than the J6P that gets killed when
the real ugliness comes. I talked to a guy the other day that plays a LOT of
money in the market. The longer he talked the more he scared me. He buys
stock with no research based on what he hears from friends and TV, has no
idea what they do, what they earn etc. He couldn't understand why he has
lost money the last year and a half. I thought guys like this were fiction
fodder for bear articles. They really do exist.
Good Luck,
Lee |
