Tuesday, December 27, 2011


There have been 38 90% volume days since this summer, no week seems to go by without having a 90% up or down volume day go by. This is not typical of bull market action, bull markets are set up by exhausting the supply of sellers and the majority are very anxious to bid stocks up so they can induce holders to sell to them, not TOO much worry about a decline in price.

But we're here in the 1250 SPX range, you might say, what's to worry, all this up and down action hasn't cost me a dime....YET!

If you read Doug Noland's DEC 23rd piece at prudentbear.com, from link I provided or on your own, you will have a better idea historically where we stand and what the current mechanics are providing to the economy.

In a nutshell, the way I see it, the voting mechanism and predictability of the stock market have eroded. The small share buyer has been replaced by the HFT and the many hedge funds that incorporate a sophisticated analogue to derive pennies of profits from 1,000's of trades a day based on spreads between 2 groups of stocks or any nuance they can find that when fed into a super computer, does all the rest. It is my belief this is all sanctioned and given rubber stamp approval by all overseeing agencies.

This is not beneficial to the individual investor nor the economy at large, HFT and those who have set up trading algorithms make up the BULK of the trading volume on any given day.

38 MANIC volume days in last 6 months is not a sign of an efficient market, and it is chasing away, and keeping away the small investor in droves. They in turn have NO reasonable vehicle to gain returns with near 0% interest rates and a 2% 10 year yield.

This policy, fostered by the Fedeeral Reserve to support economic growth is doing anything but that. YET they cling to this policy come hell or high water. STUBBORN men have gotten us into this mess, a few who think they are smarter than the combined wisdom of history and common sense.


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