Market Trends

I have been conducting a bit of research over the last couple months, and from what I have seen day in and day out relates to the following indexes:
Dow
Dow Industrial
Nasdaq
S&P 500
NYSE

Almost without fail, every single day these indexes have been virtually identical. Where one rises, all rise. Where one falls, all fall.

Until today.

For whatever reason, today each and every one of these seems to be following the "beat of a different drummer" so to speak. The only two that appear to have any similarity are the S&P 500 and the NYSE.

My question is this: Does anyone have a more intimate knowledge that might bring to light the reason, if there is one, why this would be so? The only element I can think of to cause such sporadic fluctuation is the G20 summit that is currently underway.

Anyone more knowledgeable have a better idea?

They each are weighted in different in different segments of the economy.

Look at the top 10 stocks (price) in each of the exchanges you listed. You will see how they cover different areas.

Over the long haul as the economy grows and people feel better all will go up about the same percentage.

in general, the stock markets will rise and fall together, although not always by the same percentage.

There could be any number of reasons why some markets move differenrtly but, when it happens, the differening movement isn't some kind of warning sign of any big event in the markets, it's more likely the result of something happening in one sector or another, say a big biotech issue or breakthrough etc.

Back in 2000, when the markets were flying and everyone was making money hand over fist, Clinton and Blair signed some deal that created a sharing of information amongst companies. This was done in March. From the moment the deal was signed, biotechs started falling. The downward spiral in biotechs bled into other areas and, by the end of the year, the markets were all in freefall mode.

reply to post by Crakeur


I understand what you are saying, however in my opinion it doesnt seem to adequately describe the roller-coaster that can be the stock market.

As an example of what im talking about, ive noticed that every single time Bernanke opens his pie hole, the markets briefly plunge, en mass.

Also of note, this is merely a curiosity for me; I have no vested interest in any of them. I study economics as a hobby however Im not very fond of gambling. I suppose this could be more aptly called research into sociology, i.e. how people as a whole react to different events, and what they do with their resources based on these events.

reply to post by blood0fheroes


that's because the old way of watching the markets no longer works. there used to be factors that could be followed, that would give insight to which way the market would move but those factors no longer seem to work anymore

It has been this way for longer than you can imagine. It is just that you are noticing and paying attn. recently.

During earnings season this will be more pronounced as tech-heavy Nasdaq plays out slightly different than the DJIA (Industrials) and SP500.

Remember, these are weighted by company. So AAPL actually makes up 20% of the movement of Nasdaq. If you want to see something interesting go back and trace the movements of AAPL and QQQQ over the past 365 days.

reply to post by Crakeur

but those factors no longer seem to work anymore

Directly to the heart of the matter! There must be some new factor that sways opinion. The only alternative to this option that comes to mind, is perhaps it really is all rigged...

reply to post by Dance4Life


No doubt this is the case, however I am trying to decipher more of the "why", not so much the "how". Hopefully that makes sense.

reply to post by Crakeur

I studied charts,graphs,shares,options and futures in my business degree these theories only work in free and fair markets free of manipulation which Wall Street is definately NOT an example of.At the moment its in a bubble in a total disconnect from reality and its share values are way overvalued due to Enron type accounting after the elections Id expect some slide backwards I feel its being propped up till the elections after that who knows.

reply to post by blood0fheroes


It isn't rigged.

There are time and sales stamps for all trades respectively from each trading venue. There is much more competition though taking place that has changed the microstructure of how markets are traded.

This isn't something that is easily comprehended.

reply to post by Dance4Life


it is rigged. it's been shown, time and again, that the deck is stacked in the corporations favor and, unless you're on the inside, the odds of winning are minimal

I have agree with Dance4Life to this extent...currently, the short term market is being guided by 3rd quarter earnings. Imho this would explain any minor divergence in the major indices. S&P outperformed DJIA by a minimal margin today (probably because the S&P is weighted 22.24% tech including GOOG), but as the crow flies, both indices finished flat.

I wholeheartedly agree with Crakeur on the issue of market intervention. Example...ever since the fed initiated it's POMO programs, the common trade has been to preposition long equities ahead of the bond auctions...then let the primary dealers work their magic. Today was fed POMO day by the way, otherwise the indices could have experienced greater selling pressure in-spite of support from tech sector earnings.

The POMO effect is just one example of blatant market manipulation. Watch the "boyz" as they attempt to hold the precious metals discount window open until next Tuesday's Gold/Silver opex...then watch the miraculous reversal

Goldman Advises Clients To Front Run The Fed Via POMO

Originally posted by Crakeur
reply to post by Dance4Life

 

it is rigged. it's been shown, time and again, that the deck is stacked in the corporations favor and, unless you're on the inside, the odds of winning are minimal

That is quite the accusation.

I would of course ask you for proof of this but all you could show is the opinion of a group of people that have lost money in financial markets.

There are winners and losers. Some lose more than others. To say the financial markets are "rigged" is definitely not true and is part of the reason why financial markets are not understood without much research.

reply to post by Dance4Life


Oh? Do you know what front-running(illegal) is and how High Frequency Trading(digital front running) works? What about 'securitization' and how "assets" of questionable integrity are pooled to create AAA securities? Each security, in the case of MBS, sold several times to different buyers...How about the CDS derivatives who's only effective use seems to be to rape tax payers around the world? What are the formulas they're using that not even Alan Greenspan, the man who gave birth to this mess, understands-Admittedly so?(Google it)...Not to mention government intrusion into the market when it shouldn't have to save the very corporations that facilitated this mess upon the people- with Uncle Sam's blessing firmly stamped on their actions.

Not rigged? It's never been more rigged.