Some people like art, and some people don’t really care about it. Me? I like art, paintings and sculptures, and other creative stuff, but more than just the art, I like what art says, and even more that, I like what old art tells me about life in times long past. Yesterday, I took an overdose of old art when I wandered about The Prado Museum in Madrid for about two hours. Two-thousand-year-old sculptures told me about how Roman artists perceived the best and worst in their culture. Six-hundred-year old paintings talked to me about life in pre-renaissance Europe, about the religious faith of the people, their struggles with both life and death. Two-hundred-year old sculptures and paintings suggested Spain had some angst about the transition from the old ways of life to the “modern” phase of culture and all that entails. Rembrandt, El Greco, Rubens, and Goya all told me their version, in their way, and with their expression. Yup. I like art …
The Dow dropped more than 200 points on Tuesday, handing Wall Street its worst day in three months on renewed fears of a disorderly default in Greece and concerns that China’s slowdown would hit global growth.
Oh really? The Dow sold off because China announced its growth might slow? Seriously, the market dumped because investors believe Greece’s private creditors will not take the deal on the table, that they will take nothing rather than something? C’mon now, the EU’s lousy economic Q4 is the reason for yesterday’s big drop? LOL … Brazil’s slowdown contributed to the slight market hemorrhage? I have read these as reasons for the drop in the Dow, and I believe none of them are concerning.
The very first thing to keep in mind is that this market, the one we have had for several months now, is running on trader juice. The volume is low, which means big money is not in the game. Thus, when a “panic” move, such as yesterday’s happens, it simply means traders are trading the market based on what they believe will happen in the market. They care little for the fundamentals. If they “think” “bad” news will play, they sell because they think other traders will sell. Additionally, in light-volume markets, shorts can wreak havoc, and traders do short the market. Traders also look at oversold, undersold, momentum, double this and shoulder that, so when indicators indicate or pictures form, they react to that, not the fundamentals.
Here is the very second thing to keep in mind …
Analysts have expected a pullback for weeks, citing an overstretched market. Despite the day’s decline, the S&P 500 is still up almost 7 percent for the year. If fourth-quarter gains are included, the benchmark index is still up almost 20 percent since September 30.
When something is “bound to happen”, it usually does happen, especially in low-volume markets. Given the predisposition of any market to want to go up, it makes sense that absent calamitous and real news the market will “melt up” gently, as it has done for some months now. When that happens, analysts begin speaking of pullbacks, adjustments, and clearing out. When that happens, traders begin to short the market, and the next thing you know, Brazil announces it is cutting its GDP forecast, Greece’s private creditors leak “scary” news so they can get just a tiny bit better deal, and China achieves its goal of slowing growth, and then it actually does happen. It is called a self-fulfilling prophecy. Yup, that is what it is called.
Trade in the day – Invest in your life …
