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Today's market action

edited April 2011 in Off-Topic
• Major pain trade today. All the crowded positions are going the wrong way including copper, oil, treasuries, stocks - specifically hedge fund longs, small cap stocks, etc. When people are losing money, the natural reaction is to reduce risk which is taking place today.
• As the big risk shedding continues, bonds rally and equities selloff, moving in lockstep…(didn't pimco just go short treasurys?)
• Today, thus far, is the highest volume day since March 21st – notable given how quiet the market has been of late.
• Sectors that are outperforming today are those that benefit from lower oil prices…Retail, airlines, transports. Note Goldman’s crude call that fundamentals support a return to $105.


  • Hi JR- You might recall that a week or two ago the news out of Saudi Arabia was that they announced development of a large chunk of their remaining reserve capacity, from the fields down in the southeast part of the country, I believe.

    I wondered at the time if perhaps they were concerned about the steadily shrinking available supply (especially due to Mideast political upheaval), and the upwards pressure that would put on prices. The Saudis are not stupid, and they are so widely invested worldwide that they are well aware of the potential negative financial impact if oil prices get a bit too high. A question of diminishing returns, on the same general idea of the famous "Laffler curve".

    I think that if oil stays consistently well above $100 or so the attempt to pull out of this recession/depression will be stopped cold, with probably disastrous worldwide effects. Already I note a significant drop in traffic on the Bay Area freeways since the gas prices have jumped above $4.00/gal.

    FWIW- OJ
  • It's interesting to speculate on the market moves on a macro and economic level.
    It's also interesting to note how the market internals work.
    In this respect, albeit mundane, the exchanges are operated by members.
    Members care little about trends. What they care about is making money from volume.
    They seek to manipulate prices, looking for levels that will generate the highest volume of orders.
    They will move prices based upon hype and news, as well as the greed and fear of
    the market participants to either higher or lower levels to excite buying or selling.

    Higher prices have not been attracting volume. Maybe lower prices will.
    And so it goes.
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