Jan

28

Nothing worked today. All statistical relations failed.

We had multiple down days and down opens, then a huge decline occurred.

The bonds and S&P had coupled together on the down side two days in a row, and then the bonds decoupled up sharply while stocks kept pulling down like an archetypical electric circuit.

CIT finance got its 5 billion loan conveniently announced at 1 pm, and it was good for only a 10 minute ½% rally.

The Fed came in with 5 billion of agency POMOs to liquandize their clients but the market still managed to drop a nice ½% in the afternoon, repeating for the third day in a row a strong morning and a terrible reappraisal in the afternoon.

Companies continued to beat their earnings forecast with 80% beating the star estimate, the highest in history, but instead of going up when they beat them like they did last quarter, this quarter, almost all of them went down.

The techs decoupled from Intel, dropping 6% in the last two days.

The announcement of bullish forecasts for the stock market by the favored analysts did not stem the tide when released at the propitious moment.

The early moves set the fixed number boys the wrong way the rest of the day.

The moves after Oct 27 typically extraordinarily strong for the techs were among the worst on record.

After shaping up on Oct 27 the way it has so many times in the past with devastating verisimilitude, instead of turning around the way it's supposed to, it had the worst decline in a month.

The S&P went down yet again after setting big minima upon big minima in the previous days, but did not deign to give a monthly minimum.

The most similar days to today performed exactly the opposite of what happened today, thereby proving once again that statistical significance has nothing to do with predictivity.

Yes. That's it. The only thing that worked was the principle of everchanging cycles. whenever complacency sets in. Whenever it 's guaranteed that the market will rise — why then the trainers tell the boys not to whip them too hard in the closing stretch.


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3 Comments so far

  1. Tristram Waye on October 28, 2009 11:51 pm

    Perhaps the pervasive dark boxes are beginning to eat too much of their own cooking. In times past lowly homo sapiens provided the data upon which their algorithmic magic was concocted. After a substantial increase in the presence and dominance of these cyborgs at the expense of both the greedy and the fearful, maybe they have destroyed that which has given them their success. Is there ongoing profit to be garnered by modeling a model of a model using data created by the modeler ad infinitum?

  2. SJC on October 29, 2009 1:52 am

    Vic,

    Would you suggest we start listening to Beethoven’s Moonlight Sonata? Or worse, the Requiem?

    -SJC

  3. Steve Leslie on October 29, 2009 8:06 am

    I would be interested in others' views on this theory

    It appears to me that the market is either bored afraid or just plain tired.

    Bored because there is nothing really exciting to latch its claws onto. Be it interest rates, earnings reports major announcements, time of the year etc. Just plain bored.

    Afraid because of the Administration and its refusal to address unemployment and instead trying to ramrod through health care legislation. Also there are two key Governor races in NJ and Virginia that could set a political tone that the American people are shifting their love affair away from Obama.

    Tired because it has come so fast in seven months and needs a breather. I liken it to a 1500 meter swim with 2/3 rds of the race completed and the swimmer is coasting for the last push. November December and January are all on the way and perhaps the money people are keeping their money dry in anticipation of the holiday season less than 30 days away.

    Of course it could be a combination of all three and probably many more that we could think of. Or — could it be Miss Scarlett in the kitchen with the knife.

    look me up on Facebook. love to hear from my friends.

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