One day the futures are up 200. Next day, they are down 150.
That’s not the way futures are supposed to act. They are supposed to have a more smooth, stabilizing effect on the market.
The fact that they’re jumping all over the place means one thing:
Nobody knows what the hell is going on anymore!
... the next day, a weeklong rally started, proving once again that I can ALWAYS find the bottom of the market.
I don’t know if I agree with the lack of liquidity. There are, of course, days, if not hours, where there have been “no buyers” for stocks. But these things run hot and cold.
But I agree that we are in a new stock market era. (IMO we have been in such an era since about 2003) Here we have a government that has essentially capitulated as far as freeing up credit markets and has now fully admitted to printing gargantuan sums of money. $7.5, $7.7 trillion, these are astounding numbers, half a years’ GDP, and flooding financial markets with it. And yet, we have a 10 year bond at 30+ year lows, totally unfathomable.
At some point, it will become clear that the US Tsy is printing money and using it to buy its own bonds. Essentially the world’s greatest counterfeiting operation to keep rates low. Who else would be lending to the US Govt at a sub-3% 10 year yield?? Additionally, traders are used to seeing money come OUT of bonds when the market rallies, and we are seeing exactly the opposite. This kind of forced liquidity injection is leaking into stocks. It does not seem natural at all, it’s a giant “huh?”. THIS effect, I WOULD call the “new kind of market”. Tsy monetary base has nearly quadrupled over the past 45 days.
My concern is that this effect will snap the other direction at some point, and US rates will sky. Bond holders have never, ever lost, any time in the last 25 years. It has been a one way, bull market all that time.
As long as markets are free they will maintain through the peaks and the valleys.
Oh, wait a minute...there is that little concern called the federal reserve isn't there.
Putting a stop to naked short sales would be a help.
I wish everyone would get over this new this or that new that. It’s a rehash of history with lessons not learned.
the markets are now overrun by electronic trades - not Etrade, Scottrade, etc, but electronic trades triggered by software being run by hedgefunds and the Big Trading Houses.
Prior to Bush, we used to have trading curbs so the market wouldn’t dive, crash, spike, explode and go on these crazy runs which don’t reflect any actual information based trades. The curbs helped keep actual investors from getting killed or stopped out constantly by the movement traders and institution investment mgrs.
Software now triggers more trades than individuals or fund managers. When a stock (or an index) goes up ‘x’ percent within ‘x’ period of time, the software can be programmed to dump that stock to avoid losing money for the big institutional clients. And the same thing on the way up. These hedge funds are making money on the swings and not on the actual investments.
And it is a nightmare for the rest of us. Bush doesn’t seem to give a crap. Chris Cox is not a responsible pick for the SEC job and there is apparently nobody working at the CFTC based on what has happened to commodity prices in the last 18 months.
Individual investors have been thrown to the wolves. And I don’t see any moves being considered to put ‘investing’ back into the stock market. So we will be left at the hands of traders, gamblers and momentum junkies and the ‘channel trading’ infomercial congames.
it’s incredibly sad that a President with an MBA from Harvard has absolutely no clue how our economy or our markets work. It’s hard to argue against just electing another in a string of lawyers when a business school graduate is so oblivious.