Today's market action shows how schizophrenic the market is acting. We get the 1% gap down at the open due to poor earnings from IBM, AK Steel, and others. Economic news this morning was not positive with new housing starts missing expectations. A rational person would assume that the market would decline, but you would be wrong because the only thing that matters is what the computers think (yes with neural networks they can now think for themselves). The market has staged an impressive intra-day rally so far with the major indexes up .3-.5%. Not bad, but we are still below the 200 DMA which is a good marker of whether we are in a bull or bear market. The market environment remains challenging. There is no trend, just wild fluctuations up and down dictated by computer algorithms.
Does anyone have a problem with the fact that we no longer have a market made up of people? Computers dominate the entire market and account for up to 70% of total volume. You could walk into work in the morning and see the market down 6,000 points on the Dow. CNBC tells you that the reason for the decline was because the computer algorithms decided the US was going to have a depression. What are you supposed to say? Well I guess those computers are smarter than people so let's have a economic depression, after all they have been back-tested thousands of times by Ph.D's and are correct 99.999% of the time.
Anyway, the big news after the bell will be Apple's earnings which will have a huge impact on the markets tomorrow considering Apple makes up almost 20% of the QQQ's.
On a side not cocoa prices are down again-good luck Anthony Ward.
Black Swan Insights