You can understand how people are confused. Too many misinformation spread by “experts”. Consider who supposedly also chimed in with Geithner on “computer glitch”. I really don’t know. I don’t watch Cramer. He is as he agreed with Comedy Central, a snake oil sales man.
Who is more believable?
A more level headed and correct view was issued by Marc Farber in his Bloomberg interview. He said the market went up too high too fast. Through a more technical view that goes in-line with accumulation and distribution, we went higher and higher on lower bullish volume ergo Distribution. Those in the know, knew it would go down. The markets were trading on very very low bullish volume. Ben Lichenstein was interviewed in CNBC, weeks before talked about how sellers during that time were not engaging. Technically as a market profiler, Ben understood the build up of bearish momentum back then. Since when has this been going on? If you look at a weekly view, you should notice the bears have been building up since Oct. 09.
As you examine this daily chart, what do we have? Distribution. And where did the price go to? Go read the blog entry on Accumulation and Distribution.
Another interesting view coming out from the “experts” talk about how the government wants to tax the “high frequency” traders because they help cause this situation. Who are the market makers?? What was significant before but not so today, are the hedge funders. Many hedge funders were wiped out in 2008 or consumed by larger companies. The ratio of volume of retail to institutional traders still goes to institutional traders. So why blame the retail? Misinformation. Who is buying the rationalization? The all of the sudden “economic expert” elected officials. Computer glitch!!
Meredith Whitney < sigh > addresses this issue by saying such laws are “reckless”. The issue is really this. How often do you hear the word “bet” when talking about placing a position into the market? They consider it a gambling situation. Considering all that we already know that the market for those who know how it really works, it is not a “betting” situation. Farber also dismisses this notion that high frequency traders are causing the huge drop down. He explained that most of these computer based trading are momentum trades. Legislation to tax the traders is based on faulty thinking. These government officials have no clue. Computer glitch my foot! Sorry Timmy. Get a clue! That alone shows you how they have romantic notions, funnymentals, about how the market truly work. “Reckless”.
Those who understand momentum and true technical analysis do not bet. They play what is before them.
This charts shows you how the market volume bars are generally more bearish as we go higher and higher. Huge distribution pattern here. In this chart, you can see that the bears started to accumulate since late February. There is no bullish volume here propelling this rise in price. This is not something you get excited about. This is not a healthy bullish run up. When market goes up on ever decreasing bullish volume, there is a single chart pattern definition you can think of. A bear wedge. There is also a mathematical consideration. If you are going up on less bullish volume, what is increasing? Bearish volume.
Askbucky’s chart
Thanks Bucky!!
[…] finger day occured, Issue 029 – Not A Glitch, discusses the technical merits of the move down. The real power behind the move came from longer […]