Date: June 4, 2010
DOW DROPS 324 POINTS!
Well here we go again, a hugh sell off because... well you choose the reason why but in doing so, forget about the "great" corp earnings we just had, forget the good reports on auto sales, forget the decent real estate gains...no no no, choose from one of the following:
A) The HUGE! economy of Hungry said it may need some help
B) the "EURO" droped to 1.19 that broke resistance of 1.20, by the way, why is it again that the Euro should not be a par with the US?...I'm just asking cause I do not know.
C) How about the job creation numbers although "positive" were not what some analysts had guessed. Ok so the analysts guessed wrong so that means that somehow everything changed in the US Economy from Yesterday to Today, is that what they (the market) is saying? Did we not know the goverment was hiring Cenus Workers?
D) NONE OF THE ABOVE
Ok times up, if you guessed A,B or C you were wrong and better stay after class for some "extra" help. The right answer is D) NONE OF THE ABOVE
Why do you say that "streetguy"? - Well, it's like this, in a normal market news like that above might generate a 100 point drop, mostly because it's Friday. There was no good reason for a 324 pt drop since we have just went through a correction of some 12% from the April Highs.
The reason again folks is "High Frequency Traders", Hedge Funds shorting against the "headlines" using those fancy algorithims on those co-located computers and lets not forget those "Leveraged Short" ETF's. For those of you who don't know what I mean by the above terms, please see my blog for a full explanation.
I, usually an optimist, am becoming more and more convinced that the SEC will do nothing signifigant to curb this out of control computer controlled (good morning, this is HAL) market.
What else can one think considering, the SEC has been promising to "fix" this out of control market for 2 years now and they have done nothing to address "the real problems" as I have mentioned above.
How do you know "those" are the problems causing the run away market StreetGuy?
Well let's see...In 1998 the SEC changed the market rules to allow "alternative trading systems" aka "electronic exchanges" (computer operated) High Frequency Trading computers" ETF's and "Co-Located" computers. This took the human control that previously existed that were 'REQUIRED" to "Maintain" a secure and orderly market. (does anyone see an secure and orderly market since 2007?)
Then in August 2007 the SEC removed the last hurdle for the "Hedge Funds" and these "computerized alternative trading systems" to be able to rape and plunder the average investor and his pension and 401K plans by removing the "UPTICK RULE" This was the rule that prevented short sellers from shorting stocks without first having those stocks have an uptick in price.
Now, sit back from your computer and read Just the too factual paragraphs above again and you will see clearly what is causing this run away market we have today...Now go back in time and look at some charts over the last 10 years ESPECIALLY since 2007 and you will see that since the SEC actions the market has fallen apart, there is no structure, it's all fragmented, no ne is responsible to provide "iquidity"and to "maintain a secure and orderly market"
But, don't worry, the SEC is looking into it and will soon provide NEW rules to curb this run away market and preserve your retirement savings.
Are you listening Mary? Tell the people you will have an answer any day now from you research into this matter since January 2009.
Disclosure: no position
Date: June 4, 2010