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To: stan_hughes who wrote (181217)	7/19/2002 9:31:24 AM
From: GraceZ	Read Replies (1) \| Respond to of 436258

The only thing that bothers me about the explanation is that program trading isn't new, although I accept the premise that it may now be more pervasive. Its not a matter of it being more pervasive, its a matter of other participants that might have canceled them out are dropping out, in other words its occurring in a lower volume environment. Plus the programs are getting more sophisticated. Its become apparent to those who set up these programs that price is more easily moved with large numbers of small orders than with large blocks. There is a great deal of evidence in our money flow studies that there is a great deal of selling in small orders and buying in blocks so unless you think that J6P is doing nothing but selling while institutions are doing nothing but buying you have to come to the conclusion that someone is running programs that sell in small orders and cover in blocks in order to make money on the short side. Meanwhile the over all money flow is positive in both the Naz and NYSE and the members are getting long against their will. The thought that the markets are being manipulated at the margins to meet a social agenda, or the thought that the manipulation theories are baseless and that nobody at all is actually driving the ship? There is no one driving the ship. The market is simply full of people trying to make money any way they can with little or no regard for what the long term consequences might be. Making money in short time frames can drive a market incrementally in either direction, up or down, far beyond where any rational fundamental valuation would put it. Computers programs are guided by logic, human traders are bounded by fear, the programs simply repeat what works. This pushes the amplitude of the wave beyond where a group of human traders might push it. I don't understand why anybody would want to be long this market at these levels. Did you feel the same way coming out of Sept 21? Being long coming out of that hole gave you some very good gains for the next four-six months. There are a large number of participants who have no choice but to be long, while there are many more who are banking on that performance repeating. The historical odds are in their favor. Mutual funds by charter have to be long, some college endowments have to be long, a large number of retirement funds are automatically funded.