Down goes the Dow

it's the program traders, the computer programs, that are doing this - they automatically follow momentum, exaggerating daily swings to make a penny a trade. Multiply that by a billion and you have serious money.

it's one of the few proven ways to make short term money in the market.

Until it stops working. But these trades are so short term that the risk is limited.

That's pretty much correct, from what I hear. It's always easiest to go with the flow, even if all it amounts to is circling the drain.

This is why they will halt trading on exchanges now, because it is the only way to re-set, like taking muscle relaxant for a spasm.

We're not at that point, but it has happened before, and it will happen again, especially due to new circumstances.

Down 307 now to 16,687.

At these levels, I can now begin to claim victory on all of my predictions for the year, but it's still not quite time yet to buy.

When the time does come, I will be tempted to go 3 routes: very expensive-ass diversified like BRK-A depending on pre-succession events, very cheap-ass consumer staples, and maybe gold.

Yes, gold. It's just so darned...shiny. Seriously, though, this time around, gold (physical) will be a not-insignificant part of my diversification.

Psychologically, I kind of move by calendar year. TBH, I haven't yet begun to think about 2015 in any great detail, except that the lowest point may come in Q1. Too many things will need to be resolved before the 2015 picture becomes clearer--mideast situation, Ukraine/Russia/European winter situation, US interest rate, QE taper, QE in other countries, US elections, future of Obamacare after elections, etc.

For me, it all comes down to how much money the first-world consumer has to spend, and who decides on what they spend it, individuals or government. That's where the buck stops, the ultimate goal--to deliver goods and services to the ultimate non-business end-user.

I still keep thinking of instability, bifurcation, control, liquidity, ownership costs, etc.

DJIA now down 320

Strangely quiet here, with all this action.

agip, momentum is one thing, and momentum matters--but in for a penny, in for a pound. Most are happy enough when the momentum is in the UP direction, like in 2013. There is not now any reason for complaint.

Look at it this way, if there are no gains this year, what will you have made on your much-vaunted dividends? It's probably still better than 10-year treasuries.

well global stocks (VT) are flat for the year and the US is up 4.5% for the year. total return - dividends plus price appreciation.

not sure what your question is

No question, I was just commenting that you are likely doing alright from just dividends.

I find myself asking myself this question: if the market closed down 800 TODAY, would I buy?

Maserati wrote:

No question, I was just commenting that you are likely doing alright from just dividends.

I find myself asking myself this question: if the market closed down 800 TODAY, would I buy?

yeah - that's the problem with being out - you have to get back in at some point. While staying in is a guaranteed long term solution.

I know you aren't necessarily interested in waiting five years for a stock market rebound and you have other investments. So I write generally.

I shouldn't say 'guaranteed' - nothing is guaranteed. but staying put for the long run has always worked in the past, unless you are Japanese.

agip have you gotten out of your small cap position?

I have believed for some time that the smallest of the small caps, the microcaps, especially tech microcaps, have been some of the most grossly over-valued stocks out there, for various reasons.

I therefore assume they are getting hit the hardest. If they go down reasonably far, expect a wave of acquisitions, with the big boys looking for good deals, and spending cash they have in their pockets. A perfect match.

Hard to pick who the best targets will be, you would really have to know the sector well, which you might, since you have talked about small caps. Just a thought.

Done for the day.

Maserati wrote:

At these levels, I can now begin to claim victory on all of my predictions for the year, but it's still not quite time yet to buy.

It's only October.

Yes, and this October is in 2014.

DJIA closes down 335 to 16,659, up .55% YTD.

Are you buying, Big Dog? If so, what?

Absent Fed statements, the market would be 10% lower.

And those statements artificially prop up the market for so long.

Starting to look a lot like 2008 in that regard.

Let's hope not.

Another big down day tomorrow would likely lead to panic over the week-end.

Not buying yet, Maser. I've got some cash looking to get in, but this little blip does not do it for me. I think there's more coming.

Blood on the streets. Will panic selling today trigger automatic brakes in the system to avoid a complete meltdown? Hug your 401K this morning, as it might not be there this evening.

Today's line smacks to me of manipulation about half an hour ago. We will see what the rest of the day brings.

Agree with Big Dog that there is more to come, disagree with Kanye that your 401k won't be there this evening.

I can't see a situation that is yet ripe, that would lead to panic selling today, unless there are lots of margin calls. With money being SO cheap, even that might not matter for a while.

well the good news from my point of view is that small caps are leading the market - they are up a half percent while big caps are flat

which means people are taking on some risk. could change immediately of course.

I sold a lot of small caps earlier in the year but still keep a 4% position in individual small cap names as my fun account.

it is doing poorly this year because small caps have lagged so badly.

The market goes up...the market goes down...repeat.

Yes it should finish up today as banks adjust their positions going in to the weekend.

Things should be fairly quiet on MOnday as the Bond Markets are closed for Indigenous People's Day.

Michael Harris at

http://www.priceactionlab.com/Blog/

sums it up nicely:

One day there are reports of investors being bullish on prospects of lower rates due to slower growth and thus scramble to buy and the next day the same sources report that investors are concerned about growth prospects and this is the reason they unloaded stocks. Besides the contradiction, these are simplistic assessments of what is taking place in the market that allow journalists to write articles, newspapers to circulate printed or online material, and naive technical analysts to project their confirmation bias on their readers. The answer is that short-term market movements quite often do not have a specific cause and are random. It is impossible to know the true motives of investors as this is partly a bluffing game mixed with value seeking and speculation in the short-term.

It's starting to head south which is a little worrying.

The Voice of Reason wrote:

The market goes up...the market goes down...repeat.

This ^

Once again, the voice of reason. Everything else is just so much hot air.