Real Life Money and Credit

An interesting thing has happened in the last 6-8 weeks.  There are almost no sellers.  Literally.The market has made a massive directional push up and really just holds up and does not correct now.  It seems almost funny how bad it is to try to short for more than maybe 20 minutes at a time.   Obviously you cannot fight the market - its doing what it wants how it wants.This action sure makes trading hard, the guys that are really getting the most out of it are the buy and hold.

One thing I know is that no matter what these guys do that are chasing and then bidding the market so it does not sell - it will sell eventually.  The only way you actualy make money, whether day trading or longer term investing, is to  lock in profits.Until then, its not reality.At some point they will turn the tide from chasing in, to wanting out to lock in profits (or avoid losses).

A favorite pattern lately has been to break down below a support (or even key support) and then out of nowhere a massive burst of buying comes in to rescue the market.This sort of thing happens so often now, its completely expected.Most of the time this results in a new low being made, followed shortly by new daily highs as the buyers chase like crazy.

Even when the economy was plowing along at full steam, we would have 10-15% corrections all the time.   And this was when everything was just perfect (or everyone thought so).Because of this I am not sure what is actually going on.  Several theories are in play that I think about:

1. Shorts are completely or mostly out of the market.  The SEC messing with the short rules before caused a panic, and now there are many proposals again in regard to uptick rule and shorting.  Rather than get caught, they are staying away from day trading and longer term positioning.
2. Manipulation factor on high.  There is a group of large banks or funds that are pushing the market higher at the Fed's and Treasuries request to try to turn the economy out of the recession by making it appear as if the stock market has it figured out.The way the market always rescues itself from the brink of disaster, the ramps into the close every friday, and other odd trading action gives this one some credibility.  Would be easy for the government to just give these guys money to push the market up.
3. Traders are mostly gone, and computer algorithm trading takes over.  This one can happen as well - computers have taken over more of the futures trading which drives the market.Since no one tries to fight this trend, with all of them doing the same thing it just feeds on itself.I like this theory too because the actual price variance is so unusually low on these large pushes higher.I have seen the DJIA futures push up almost 100pts in 20 minutes with hardly a retrace at all, even at the high.  Sure this happens - but not this often as it does now.

Whether any of these are true, or a combination, I have no idea and we may never.  All I know is the trading action is very odd and I expect at least half if not more of this gain to be gone when this is done.Note that I am not predicting a top in the market, I am simply stating that what goes up almost always goes down - and the down is usually painfull.  We could hit 9k, 10k etc.  I really dont think 10k is possible, with GM dust, C is dust and a few others they just dont have the fuel for the DJIA to actually push up that high in the short term.

Maybe everyone just needs to learn to trade again - this is the new market to stay!