Been e-mailing my trader friends to discuss the same thing. Huge volume today on the ES and a lot more choppy than usual. I suspect there are a lot of traders looking at the late July support of 771. Either way, a tug of war is happening.
They should just let the market fall and get it over with. It's no fun when the after hours guys make all the money (gaps), and we get the narrow range to play with. I can't see how 775 will hold with all the downward pressure. The funds are obviously selling continously to meet cash withdrawal demands. 10/4/02: 3rd Qtr Equity Fund Outflows ($51.1 Bil) & Taxable Bond Fund Inflows ($43.5 Bil) Largest on Record Equity Funds reported outflows in the second quarter totaling $51.1 Billion, the largest quarterly outflow on record. International Equity Funds reported inflows overall - with outflows from all Emerging Market regions, as well as Japan and Europe. Real Estate Funds reported inflows of $403 Million or 5.2% of assets. Taxable Bond Funds reported record inflows of $43.5 Billion. Government Bond Funds received $31.7 Billion, 73% of the total, while Investment Grade and High Quality Corporate Bond Funds accounted for the rest of the inflows. High Yield Corporate Bond Funds reported outflows of $926 Million and funds investing in International and Global Debt reported outflows of $89 Million. Money Market Funds reported redemptions of $52.5 Billion. Municipal Bond Funds reported inflows of $10.6 Billion.
775 is just the S&P. Look at the Dow or the Russell 2000. Or individual stocks for that matter. We've already broken support.
This a most interesting notion not talked about too much. It kind of reminds me of how mortgage lenders who, in a declining interest rate environment are naturally short convexity due to their prepayment exposure, so they need to keep buying more bonds, and the market starts to feed on itself, and a domino effect takes place....if the funds start to PUKE stock based on the redemptions, we will see THE CAPITULATION OF A LIFETIME.
the S&P 500 cash index is what matters the most. The Dow is only 30 stocks and the nasdog has gone back to lowly status. If the S&P holds, that is good enough for me. If it doesn't, then this bear is nowhere near over. We just have to see and not jump to conclusions before the fact.
after hours good news out of yahoo, one of the few former high flyers that still matters: http://news.moneycentral.msn.com/breaking/breakingnewsarticle.asp?feed=OBR&Date=20021009&ID=1988756