Wall Street Equity Traders Panic: The Dow Is Down!

The Business Insider | 11/19/09 | John Carney|

[FromLori]

Glum trader who missed most of the upside is now convinced the market will only go down for the rest of the year.

The Dow is down over a hundred points today and it's making professional traders nervous.

We spoke to a friend this morning at a large prop trading desk inside an investment bank and we’ve never heard him so bleak. He says that all the equity traders on his desk think the market will do nothing but go down for the rest of the year.

“We’re all waiting for the market to crack. And it looks today like it has cracked. We’ve had all this upward momentum with no volume. But now that thin buying up has gone. The only question in my mind is whether it’s a slowly deflating balloon or whether we’ll go into freefall,” he said.

Make of that what you will. Maybe it’s a contrarian indicator. After all, very few of these prop trading types believed in the rally going all the way back to March. Maybe the Wall Street traders are now contrarian indicators.

[A.A. Cunningham]

http://www.businessinsider.com/wall-street-equities-traders-panic-the-dow-is-down-2009-11

[FromLori]

Thank you.

[Attention Surplus Disorder]

There is a certain amount of truth in that story and I would be the last to deny that it has been a smoking winner of late. And I’d even say that it will take a lot to get this market down and it’s likely to be slow and grindy....barring a catastrophe. As I’ve said elsewhere, this rally has been even more impressive than the decline. The gains that have occurred in many, many stocks off SP 666 have been beyond unbelievable, very common to see quadruples, quints, octuples. And these moves have been in huge stocks, not things you’d have to look under rocks to find. You could be in Dow Chemical for two full generations before you saw a percentage move from $6 to $28. You could be in FCX for thirty years before you saw a move from $18 to $85.

But virtually all stories eventually come to an end.

Story examples:

There is a ton of cash sitting on the sidelines.
Where else you gonna go?
Nobody wants to be out when _________
Nobody wants to be in when _________
Emerging markets are where it’s at.
Small caps always outperform big caps when the economy is turning.
This market could lose 20% and it would still be a bang-up year.
Markets climb a wall or worry.
Etc;
etc;

So I’m not disagreeing with you; only saying that all stories come to an end, and the problem is that if you’re stuck in stock at the end, we in the US feel we are entitled to an 18 month recovery from any and all recessions/mkt declines. But if we go into a version of the Japan story, we’re talking about 2 decades of doldrums.