Monday, November 10, 2008

Where have I seen this before?

The Dow is falling and then out of nowhere, it rallies for 200 points in 23 minutes to close the week on a winning note. Gotta make the masses feel good over the weekend…
Then it opens up another 200 points on Monday morning.

Like I told you a few days ago, these are not the traits of Bull Markets. These are the traits of overt futures games (manipulation?) and are destined to fail in a sharp spike lower.

In the last three days, the Dow has rallied 5 points. ALL of the move was a result of spikes up in the last half hour of trading, or on gap up opens. That means that none of it was real. It’s all price fixing on no appreciable volume.

I still think that the only reason you can get these price moves with no volume is because the market is not at a level which attracts buyers who want to take stocks home at night or hold them for more than a few hours.

In my opinion, one of two things is going to happen –
1. All the buying of assets off the balance sheets of banks will get enough cash into the system that prices of assets will actually start to move up again
2. Prices will fall low enough to attract investors who want to hold for more than an hour

Today the Dow rallied 140 points in the last 24 minutes. So the games continue…

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