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Market Looks Like A Broken Record March 5, 2011

Posted by Tom in Thoughts.
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It’s beginning to look like the same old thing.  Market surges higher – bad news – market drops hard for a few days – market recovers quickly.

Such abrupt changes are not the ones that smart big money make.  They can’t.  If a pension, mutual, hedge or bank fund wants to get out, they have to do it over many days, if not weeks.  Can you imagine trying to sell a couple million shares in a few hours, when the retail bid (to buy) is for a few hundred shares ?  Well in reality, these orders don’t go through any retail platform, but the point is that it’s hard to find a big buyer when you’re the big seller.

These quick changes must come from sources that are moderate in size / volume, and more “hot money”.  There in lies the problem; the short term market is driven by news and fueled by those who want to be the first one out.  One of these days, they will be correct.  So far: not.

Friday would have been a big down day where it not for very big (i.e. instututional) buy orders coming into the market during the last 15 minutes of trading.  Perhaps the big guys are smelling a buying opportunity, we’ll see early next week.

Corporate earnings were pretty darn good this last quarter, and more demand will likely force hiring, which will in turn stimulate more consumer buying.  The wild card is oil and fears of what high prices will do to this economy.  So we get back to news and the “hot money”.  Until a significant support level is broken, one has to go with this market and buy quality, growth companies on dips.

My own opinion, I see S&P (index) support at around 1294.  A close below that would get my attention.  It will happen, the question is when, and no one knows that with any certainty.  Moving sectors include: Oil Exploration, Fiber Optics, Machine / Materials, Oil & gas Exploration, Oil Drilling, Networks.  No surprises here; Oil & Tech.

Be careful out there.  As I said, news is driving this market and people are anxious.  This market has gone a long way without a significant correction down,

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