Mindless Churn in Trendless Market

Mindless, numbing churn.

Down 200 points, then 2 days later up 200 points, then 4 days later down 150 points, then 3 days later up 150 points.

A one-month chart of the S&P 500 below - we're at the identical spot we were almost a month ago. Showing us on the path to nowhere. Nothing but a traders market. The only people making money are brokers handling the trades. It is getting mighty monotonous at least from this seat.

Here is a 2 month chart below. Yes we had that dip in mid July, and if you bought it and flipped out in a few weeks you made some change, but we are EXACTLY where we were 2 months ago as well. Churn.

A lot of punditry analysis day by day about why the market is up by this amount or down by that amount, and why that day's action "signals" a bottom in this or a top in that. But when you take a few steps back, you see complete random action leading to nothingness. Volume falling off a cliff these past 2 weeks. People abandoning (or vacationing) this randomness where no trade is safe for more than a few days or weeks at most.

A trendless market that is signaling nothing other than it is clueless. Sorry, I'm not jumping up and down and screaming how today's rally once again signals this or that. It signals the same thing it's been signaling for 60 days: nothing.

Comments

[Paul D. Cas...:]

Investors Intelligence (I'm a subscriber) is saying the sentiment DNA of this period mirrors 1994 - 1995.

For the entire 12 months of 1994 the S&P bounced around between 400 and 500, never once closing above 481 or closing below 438 (a range of 9.8%). In December 1994 the S&P then took off on a 52% rally that finally peaked in May 1996.

We'll just have to wait and see if the price action also mirrors the sentiment. My money is invested as if it will.

2008 Aug 27 06:57 PM

[mkreisel:]

This time is more like 1974 than 1994.

Yeah baby, buy buy buy!

2008 Aug 27 07:41 PM

[whidbey:]

I despise being made to appear foolish too long. The bear is long in the tooth, so maybe just a little hope for the equities can be tolerated. For example, if oil tops out here, trannys are hot, and if the dollar is near a bottom maybe gold goes into hibernation. I am punch drunk but still interested. But and I too early?

2008 Aug 27 08:15 PM

[cynic69:]

This market is being manipulated by the Bush puppeteers. When the price of oil sky rocckets the puppeteers are going to get their strings tangled, big time.

2008 Aug 27 11:22 PM

[adan:]

nothing, or a basing

no idea myself at this point, though i lean toward down, at least in the near-mid term

thanks, nice chart and info

2008 Aug 28 09:48 AM

[John Lounsbury:]

I hate to disagree, but I don't see market or economic conditions having much in common with either 1994 or 1974. Yes, a few isolated comparisons are there, but the general situations differ in major ways. The credit markets and the financial industry today have little in common with the two previous times. Energy supply was a major problem in the early seventies (and rapid price increases resulted) while the limitation of supply is much less in the current energy crisis. There are no gas lines, etc. In major areas, such as global economic structure and the potential for rapid growth of alternative energy industries, there are few similarities.

All that being said, I don't have a clue whether the market will be up or down in 3-6 months. I do believe that there will be renewed economic growth over the next five to ten years. While stocks may not repeat the dramatic bull markets experienced after the 1974 bottom or in the 1990s during the next decade, there will be opportunities for profitable investments.

2008 Aug 28 10:32 AM

[TraderMark:]

Pangaea

+1! :)

2008 Aug 28 07:13 PM

[Danny/The D...:]

"The U.S. is stuck in a consumption stage of growth, and if you or I don't buy stuff on credit, the economy doesn't work." Michael Avery, Ivy's Chief Investment Officer -- as quoted in BusinessWeek, Sept. 8,2008

I couldn't explain the U.S. investment environment better. All my life I've refrained from buying anything on credit that depreciates in value. And I'm not about to change my way at age 70! My equity investments are in Energy; patiently waiting for global demand to again "prime my pump"! I've got lots of patience.

2008 Aug 30 03:21 PM