The Futures Were Way Above Fair Value Most Of The Day
And whenever they backed down the market started to drop.
They stocks that increased the most were the ones where such increases had the most impact on the indices.
No in the 100+ years of stock market activity in the US all the up was not manipulation. But for most of that time stocks were trading at PE's that justified the prices and the growth in P was a function of the growth of E.
And yes the market never goes up or down in a straight line (except on a day like today when it is being jammed <gg>. That's the point. This is a little simplistic but today was about as natural as throwing a ball up into the air watch it reach a peak and start coming down and then without touching anything reversing course and start going up again at a faster rate than it had when it was first thrown. It only happens when you install booster rockets in the ball.
Underlying technical analysis is the assumption that, all things being equal market participants would rather buy for less and sell for more. When you overlay this assumption on a large number of participants who vary in their perception of the value of what is being traded you get all of the patterns we look at.
When you see bids higher than asks, constant volume of significant duration in the context of rapidly rising price, when a company as large as INTC goes up 20% in two day on no news, when you see that the PE of a stock is more highly correlated with its weighting in the various indices than any other factor, there is a very high probability that the market is being dominated by people who would rather pay more than less, or have some other motivation for what they are doing.
Its not like there have not been many times in which one market or another has been compromised. But usually it is seen in smaller markets where it is easier from time to time, for a few market participants to dominate the market, commodity markets are notorious for this kind of activity. But when an equity market the size of ours displays this kind of behavior on a consistent basis, it always has been the harbinger of something bad.
But looking at it more philospically things get better and better until they get so good that they can't get any better so they start getting worse. Then they start getting worse and worse until they can't get any worse and then they start getting better and better. So I guess after today we are one day closer to the time when they can start getting better and better.
You could say that its better when things are worse because that's when they can get better. So from that perspective today was a great day.
But as the song says:
"Nighttime is only the other side of daytime
but if you've ever waited for the sun
you know what it's like to wish daytime would come
And don't it seem like a long time
seem like a long time, seem like a long, long time"
and a little further on:
"War time is only the other side of peace time
but if you've ever seen how wars are won
you know what it's like to wish peace time would come
And don't it seem like a long time
seem like a long time, seems like a long, long time"
Have a good vacation - and remember whenever you buy something to always pay more than you need to. <gg> |
