Crisis, What Crisis? from Jim Sogi

September 21, 2007 |

A E NIn the the July/August drop, which we now look back on as a mild "correction", the market participation was very low. This is counted by the depth on the tickers averaging less than 2,000 orders showing on either side of the book. Contrast that to today at high price levels, and also at the prior highs this June when the order book is typically showing cumulative depth of over 15-20,000 orders per side.

Oddly, at the same time the orders are numerous, the volume the last few days is a third to a half less than in the "correction" and dip. At this writing, the bid shows a cumulative depth of over 19,000. This has a few obvious effects. At the top, with such a high number of orders on the inside, the price is boxed in and can't move, except to grind upwards.

17,000 orders represents $8.5e+08. At bottoms, with fewer orders, big orders will clear out 10-20 points, so the price is flying around eating up orders. The volume at the lows is double, so its just a few guys are doing big volume down there. The larger droves come out to buy at the tops with Helicopter Ben's money?

It's easy being a hero after the rescue. Who does speculator's work at the bottoms?

Another one of those changing cycles, but its hard to test with ephemeral data.





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