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VOLATILITY has ended or is about to resume? 31 July 2009

Author: Sy Harding

VOLATILITY has ended or is about to resume? July 31, 2009.

Thanks for the rally of the last three weeks, which saw the S & P 500 gain of 12.1% fast, the market, it was for next year, three weeks ago, is now in place, the Dow Jones and S & P 500 nearly 10% for the year.

Where are all investors should be on the stack? They fired suddenly last year and early this year and still nowhere to be seen.

Oh I know all the other days, we hear the cheerleaders of the CNBC to comment as "really Investors piled into the market today, leading the Dow Jones up 225 points. "But that's not really what happened. Volume of trade was so dramatically draining each year, very few "piling on", instead of raising a hand, leaving the market more often day traders and large program commercial (which alone accounted for 40% of the volume anyway).

Volume in the normally slow summer months, investors and traders benefit from holiday and are less interested in the market, especially since the market has tended to decline in an unfavorable seasonal correction in the period May to October.

But this summer, the volume has been reduced more than usual, but so far the market has made gains. Related to the old adage "Sell in May and Go Away ", the S & P 500 has gained 12.8% since May 1st (but almost entirely through its 12.3% rally in the last three weeks).

There is a mountain of money that could be the difference in the stack and could be an important fuel to keep the current meeting. Even After several billion $ of household wealth has vanished in the last two years, thanks to falling stocks and declining prices of housing, there is still $ 4 billion at the meeting that money market funds with almost no desire. And the mid-June of this level has fallen by only 4%.

Contrary to reports, less than half of it is available to the market anyway. Approximately 60% of it is still parked in money market funds by companies as their cash reserves, along with gains and soaked in the purchase of equipment, materials, investment and other non-commercial purposes.

The reluctance of investors Dismiss is understandable, given the volatility whipsawing. It was a difficult year so far, in many ways more difficult than last year at least when they realized it was a bear market that will continue throughout the year.

Although this sounds like an easy year to be able to say, with the vision Of 20-20 hindsight, that the S & P 500 is a 10% volatility has been brutal.

The year began with the filling of its rally in the bottom of November January 6, as investors are increasingly comfortable with the rally. Then, a heart stopping plunged 25.1% in just two months from March low. At that time, the fear and pessimism are, to the end. Then bam – began a rally off the March low, which took the S & P 500 by 17.5% in just 7 days as rapidly that most probably missed this part of the rally. However, the demonstration continued, albeit more slowly and, in early June, was 40% above its low in March.

Then, as investors become familiar with a new assembly, the market sold for four weeks in June, and the fear started to return, even if Wall Street has recognized that the market had been before he was due for a correction, maybe even test a March low.

But no, after a decline of 7% in four weeks, the market reversed again and jumped 12.3% during the past 3 weeks.

This has been a roller coaster for the purchase and try to keep investors and the market time to try to keep reverse.

Changes of opinion about the prospects of the economy have been equally spectacular, in fact creates a market for investment. The views on the economy are all investors can use to guidance at this stage of an economic slowdown.

Good times, the economy is growing and therefore corporate profits, and is primarily a matter of selecting the best securities or sectors that will benefit the most fun. In markets, performs essentially a matter of form, and collection of some of the benefits of short selling and the inverse of ETF and mutual funds.

However, these are times when the outlook is uncertain and there are different views on all the lot. The economy remains sluggish, corporate profits are still plunging, consumer confidence continues to decline. However, in May is not too rapidly, which may be an early sign of a fund – or not in May

The rebound in home sales and prices of housing in recent months indicate a fund for the housing industry? Or is the normal seasonal pick-up in the tradition of welcoming the spring buying Season with more problems from the increased number of seizures?

Whipsawing volatility is over, and became a long-term trend and several years of bull market? Or is the market ahead of himself in his euphoria?

A couple of things to keep in mind is that the major indexes have been become very overbought technically, for example, widespread over 20 weeks at the top of the moving averages, a condition often seen in the medium maximum. 2nd quarter and the period for reporting of income is a little more, and there is no argument that the interpretation of these reports increase were the main driver of the last three weeks of spectacular rally.

Sy Harding publishes the financial website http:> "target = "_blank"> Www.streetsmartreport.com "> http://www.streetsmartreport.com/ and a daily blog of the free market "target =" _blank "> www.syhardingblog.com"> target = "_blank" href = "http://www.syhardingblog.com"> http://www.syhardingblog.com

About the Author:

Sy Harding is CEO of Asset Management Research Corp., author of Riding the Bear and the 1999 to beat 2007 the market for the Easy Way, editor www.StreetSmartReport.com, and target = "_blank"> www.SyHardingblog.com.

Article Source: ArticlesBase.com – 31 July 2009> A COMPLETED VOLATILITY or is about to resume? 31 July 2009

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