Same old same old

Why is the stock market so weak today? Sure, there are valid questions about the economic outlook, but the current stock market is driven far more by trader sentiment and technical trading than about either economic or business fundamentals.

When the market gets pushed down (by short-selling and short-term selling by hedge funds and in-house proprietary trading at the big banks) too far too fast, traders and speculators then reverse their trades and push the market the other way. And when the market rises (due to short-covering and short-term speculation by hedge funds and in-house proprietary trading at the big banks) too far too fast, such as on Monday, traders and speculators once again reverse their trades and work to push the market back down.

This is also known as range-trading or trading in a range. Range traders and speculators use technical charts to guide them as to "support" and "resistance" levels where they establish and reverse positions.

What does it all mean for serious investors? Absolutely nothing! It is all noise or "friction" that may or may not make a few extra bucks for people who get the turning points right (so-called market timing), but ultimately has no impact on the longer-term market trends.

In short, the market movement today or on Monday has nothing to do with long-term economic or business fundamentals and everything to do with business as usual on Wall Street.

True investors should avoid the "show" -- unless you are one of those crazy people who actually enjoy getting sick on rollercoasters.

-- Jack Krupansky