subject: DOW (NYSE:DIA): September and October looks like March and April [print this page] DOW (NYSE:DIA): September and October looks like March and April
The rally in the market from September and October 2010 looks much like the rally which occurred in March andApril 2010, may I remind you we had the Flash Crash on May 6th which tested every ones patience, and really contributed to this rally because it shook out many long time retail holders who threw in the towel.
Markets move because there are the fewest people on board the train..it always leaves the station lightly loaded, that is the nature of supply and demand and clearly all the retail investors who threw in the towel missed the boat.
So what does that mean for November? It probably means a 5-7% decline/pullback or whatever you want to call it, as for December we really won't get a grasp on this until we see what the US Consumer does for the Holiday at the retail level (Christmas Gifts).
This rally in the market had traders predicting the Fed would buy between $500 billion and $1 trillion in Treasurys to drive interest rates lower and boost lending and spending. That expectation had been priced into the market in recent weeks driving the market higher, so anything that might fall short of that could hurt stocks.
A report in The Wall Street Journal said the Fed's bond purchases might amount to a few hundred billion dollars over several months, which would fall short of those predictions. The report came a day after William Dudley, the president of the Federal Reserve Bank of New York, said the central bank cannot fix the sluggish economy immediately.
Treasury prices fell Wednesday, driving interest rates higher. Stocks had been reacting favorably to the expected program because a bond purchase by the Fed would drive interest rates lower. And with interest rates so low, investors would eventually turn to stocks for better yields on their investments. The Fed meets next week and details of any bond-buying program are expected to be announced when the meeting wraps up Nov. 3
