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Strategies & Market Trends : MDA - Market Direction Analysis
SPY 680.44+0.6%Dec 19 4:00 PM EST
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To: Giordano Bruno who wrote (9856)4/5/1999 1:21:00 PM
From: Robert Graham  Read Replies (1) of 99985
 
Yes, the public trader in action. Good observation! As represented by the DJIA, I do think some of the more serious players in the market are getting a bit nervous and shaken out too. They apparently are not accustomed to the volatility that the market continues to provide us.

I also have made an additional observation that may explain the large swings in sentiment that would support your observation. I find that many public traders, if not most, are essentially gamblers that are in the market for reasons similar to those who go to Las Vegas. So I think fear is at the flip side of their trading.

This group of cognitively suppressed individuals moves from fear to elation and back again. I think the fear comes from on some level being aware of the possible disaster from a trade. The elation comes from knowing they succeeded from a gamble that had a potentially significant downside for them. In a perverse fashion, it is their underlying fear that keeps them in play even when a stock has dumped on them. The fear also in this case comes from missing out on a potential profit, another success against danger, the danger made evident by the spill in the stock price. Once the stock rebounds, their fear turns into elation as they more aggressively pursue their mounting profits once they have learned they survived the market one more time as "winners".

Just some thoughts. I wonder if GroundZero has some comments to make on this.

Bob Graham
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