Kudos to MMs

But you are confusing yourself, I think. Let me give you an example.

Say I am a toll operator. The amount of money coming into my coffer is based on the amount of traffic that goes through my roads - no way around the toll. The total number of cars may declining, and at the same time I could be seeing more traffic through my roads collecting more tolls! There are lots of ways this can happen.

Why cant the same thing be happening in to the stock market? Are you saying that it is not the amount of money in the system that is driving prices, but the inflationary pressures?

Quote from Daal:

But what about citigroup issuing bonds?If you are going to add these sorts of bank debt to the money supply then the money supply will rise a lot yet that is not inflationary because that 'money' has almost zero velocity. Low velocity debt cant be counted as money, time deposits are just a type of a debt instrument. Money at zero maturity(MZM) is probably a better measure of liquidity but even that has been distorted by the fact that people changed their liquidity preference due liquidity fears as a result of the financial crisis. My point is that this liquidity that people talk about is not right, liquidity is actually weak/going down. Market driven liquidity cant be a bull point because its like double counting, conditions can change at any time
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I like MZM - its growth is decelerating, by the way.
Also, went short GDX at 2PM. Interesting to see nitro went short at around the same time.
 
Quote from nitro:

But you are confusing yourself, I think. Let me give you an example.

Say I am a toll operator. The amount of money coming into my coffer is based on the amount of traffic that goes through my roads - no way around the toll. The total number of cars may declining, and at the same time I could be seeing more traffic through my roads collecting more tolls! There are lots of ways this can happen.

Why cant the same thing be happening in to the stock market?
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I'm not sure I understand you. Volume has been going down for months in the stock market, and velocity has been going down in the economy as well
 
Quote from Daal:

I'm not sure I understand you. Volume has been going down for months in the stock market, and velocity has been going down in the economy as well
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How do you jump from money to volume? Money seeks price, volume records it. Volume by itself is like saying I want to eat 5. 5 what, and for how much? We have already decided that there are an equal number of shares bought as sellers sold per transaction. That is saying the same thing in a different way which I have already addressed as a mirage as far as price is concerned.

You cannot use absolutes in markets. If you don't use ratios, Natural Logs, etc, you will always confuse yourself, imo. Overall volume is down, but the number of asset classes and the number of countries chasing that money has dramatically gown down, easily making up for "lost volume."

Let me turn it around and start with a fact. The market has been going higher almost non-stop since 666 SPX. If volume is down, and there are an equal number of buyers as sellers (your arguments), how does price ever move, and therefore, how do we get from 666 to nearly 1050?
 
Quote from nitro:

How do you jump from money to volume? We have already decided that there are an equal number of buyers as sellers. That is saying the same thing in a different way which I have already addressed as a mirage as far as price is concerned.

You cannot use absolutes in markets. If you don't use ratios, Natural Logs, etc, you will always confuse yourself, imo.

Let me turn it around and start with a fact. The market has been going higher almost non-stop since 666 SPX. If volume is down, and there are an equal number of buyers as sellers, how does price ever move, and therefore, how do we get from 666 to nearly 1050?
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Those buyers and sellers changed their expectations over future corporate earnings as a result of the 2nd derivative turning positive and then priced in a V shaped recovery as the economic data kept getting less bad unleashing an optimism speculative boom.
The same way that someone might bid $4K on a Chevy then bid $150K one minute later when he finds out Elvis used the car for one year
 
Quote from Daal:

Those buyers and sellers changed their expectations over future corporate earnings as a result of the 2nd derivative turning positive and then priced in a V shaped recovery as the economic data kept getting less bad unleashing an optimism speculative boom.
The same way that someone might bid $4K on a Chevy then bid $150K one minute later when he finds out Elvis used the car for one year
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But there are an equal number of shares bought as sold, according to you. And volume is down. How does price ever move?

You see, you are just giving a different explanation as to why it is going up than I did, and yet used arguments like above statement about volume and matched buyers and sellers to disprove my explanation. Why doesn't the same argument disprove what you are saying?
 
Quote from nitro:

But there are an equal number of shares bought as sold, according to you. And volume is down. How does price ever move?

You are giving a different explanation as to why it is going up than I did, and yet used arguments like above to disprove it. Why doesn't the same argument disprove what you are saying?
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I never said there is an equal amount of buyers and sellers. I said for every buyer there is a seller
 
Quote from Daal:

I never said there is an equal amount of buyers and sellers. I said for every buyer there is a seller
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That's false anyway. There could easily be 200 buyers and one massive seller. What is true is that the number of shares (contracts whatever) bought = the same number of shares sold, but it is price that matters where they went off.
 
Quote from nitro:

That's false anyway. There could easily be 200 buyers and one massive seller. What is true is that the number of shares bough = the same number of shares sold, but it is price that matters where they went off.
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Well, there is no disagreement here
 
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