Mar

12

 1. Today was a classic in that the frustration aggression hypothesis of stock market movements was totally satisfied. The lead S&P had been above 1300 continuously since January 31 and had not set a new 20 day low since august 26 , 2010. It had set a within day low four times below 1300 in the previous two weeks but each time closed above. The Nikkei had been above 10000 since Nov 30, 2010. Thus the evil invisible hand of the market had not been satisfied. There were stimuluses that should have led to massive selling so the strong could capture profits from the weak but an inappropriate displaced response had occurred in Skinnerian terms. There was frustration that a proper response had been blocked. An aggressive displaced action in Dollard - Millerian terms, was required. It all happened at Midnight when the Nikkei broke 10000 for a minute and the stock market broke 1300 going down to 1278 thereby luring a whole medley of weak holders and fixed system people into doing the wrong thing. Okay, finally a appropriate response happened with all the breaks. Alternatively a climax occurred, and once it did everything was de rigeur again and the market promptly was ready to go it's merry driftingly way up.

2. Could there ever have been a day when a content analysis of the news would have been more negative with floods, earthquakes, tsunamis, war, and bad economic numbers galore. All we needed to put it at all time most negative was news that the president was holding firm on trading off an increase in the service rates in exchange for a reduced budget deficit. It shows the idiocy of the programs that monitor the news to get that ever so difficult trading edge.

Ken Drees writes:

Very beautiful summary. And notwithstanding the monster earthquake (which doomers prayed homage to since the 80s as the secret to knock the Nikkei to its knees– 25 years too late and still it didn't work) and on the eve of Friday trading, this seems to be masterful piece of frustrating market action.


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