from: a journalist to: fund managers

Quote from journalist123:

Question 1:

Why did the U.S. stock market stage a comeback on Friday around 2 pm EST to end positive for the day?
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The identification of any external cause is necessarily variable and therefore has little meaning because you cannot possibly rule out other causes. Ofcourse as a journalist you're trained to ask these questions, but given how markets function the possible answers that they might yield are of little use.

Ofcourse as a journalist your primary objective is and should be only to capture as much ears and eyeballs as possible. From this it follows that your strategy should not be to find a definite external cause for market behaviour, as this is not possible, but should be to identify a cause that allows you to write an article that captures the most eyeballs.
 
Quote from lindq:

And short term: Expectation of valuation.

The difference between short-lived expectation (which is emotional) and long-term valuation (which is factual), is the cause of inefficiencies in the market.
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Agree with that. Sentiment in the short-term (maybe same as what you are saying above) and valuation long-term.

Hussman has some good info on normalized earnings of the market and subsequent returns.
 
Quote from journalist123:

My first thought was some rumor about an IMF bailout.

Or some good news out of the euro zone.

But I couldn't get anyone to confirm my suspicion.

Anyway, it would be nice if I had traders/fund managers to tell me what's going on...
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There was a rumor of a special weekend ECB meeting, but that was earlier in the day, when the mkt was actually tanking. By the time Europe closed, the rumor was denied by Trichet.

I am inclined to agree with the other posters out there in that it's likely to have been short-covering for the weekend. These things happen occasionally.
 
Quote from journalist123:

The problem is that I need either a fund manager or some analyst to quote.

I can't just say "awesome independent trader who knows what's going on" says this is why the market moved.
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euh ??? why not ???
 
and why no technical analysis ? lots of big money moves on technical analysis. Seems you have a very small view on the world and want things to fit in into that.
 
question 1:
<i>Why did the U.S. stock market stage a comeback on Friday around 2 pm EST to end positive for the day?</i>

i'm not a fund manager. i am a full-time trader.

you say "no technical analysis". well, then you won't like the answer given, but technical stuff is the reason many moves occur. besides, <b>you're asking the wrong question</B> - the right question is given later.

here's the background:

i don't generally trade the indices (and had taken friday afternoon off), but the market is <b>short-term oversold</b>. at 1 pm friday, the s&p basically went straight down for the next hour. for any short-term trader, that type of action in the middle of the day is a clear sign to at LEAST cover a chunk of shorts, if not go long.

<b>so that's the 2 o'clock bounce</B>. big deal, dead cat bounces happen all the time. the reason is "profit taking!" or "it can't fall any further". that's the bounce for the next 30 minutes. much of the time, the original direction (down) resumes.

HOWEVER...there's that oversold thing. and intraday, we were just oversold. it starts to go down again (about 230-245) and can't do it. and instead of going down again - it starts to reverse up.

so what happens? shorts who hadn't covered before want to lock in profits. shorts who jumped in on that bounce, sure it would go back down again, start to get stopped out. and many traders know of this kind of squeeze setup, and start jumping in.

the BIG move after 3pm was likely a combination of that, and the crowd who don't like to hold their position over the weekend after a kind-of (daily) big move (in this case, the shorts).

the right question isn't what happened at 2pm. the right question is "<b>who were the buyers who stopped the market's downtrend / pushed it up between roughly 2:30 and 3:00"</B>? and you won't find the answer here, you'd have to find it by asking fund managers to let you see their trading logs. good luck with that.

and if you're saying "no technical analysis", you're kind of missing the whole picture.
 
Quote from Martinghoul:

I don't think this is the answer you're looking for, but here goes, anyways.

When there are more buyers than sellers, the mkt goes up. When there are more sellers than buyers, the mkt goes down.
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This is not correct in general. It may be the reason on certain occassions but there is a more general rule that covers all cases. before I explain it to you, try to think why your statement is not true in general.
 
Quote from intradaybill:

This is not correct in general. It may be the reason on certain occassions but there is a more general rule that covers all cases. before I explain it to you, try to think why your statement is not true in general.
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Chill, dude... My statement is a gross oversimplification and was made half in jest. Especially, since I know the OP is not looking for anything as silly as 'more buyers than sellers'.
 
Quote from intradaybill:

This is not correct in general. It may be the reason on certain occassions but there is a more general rule that covers all cases. before I explain it to you, try to think why your statement is not true in general.
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short covering is buying, you never know if the trade is to open a trade or close a previous entry.
 
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