I think a point is being missed here. Who was it, Mamis? that said a bull climbs a wall of worry. you've also got to look at who is participating, soccer mom? or a bunch of waggies. As long as we have a lot of traders saying, "ya but" we'll have small ranges. We'll have larger ranges when the bulls say, absolutely higher, and the bears say, absolutely high enough, and j6pac, soccer mom caught in the middle. Until then, caution is the game.
It is a two stepper type answer. Volatility compression occurs in the market in response to a set of economic pressures. We have achieved that at this point. The Bush aspect of it is a clear causal factor. This is the first administration since OMB was set up by the most precision oriented President to sit in modern times to operate as this one does. There are two major ways to administer the government. This administration is unique in the approach it uses. Google "Brandeis reports" to get the "normal" modern way. This is a form of high class problem solving using an "honest broker" to iteratively refine the solution. Google "idealogue" to get the way it is done now. Bush is handled by a crew which is politically oriented (Cheney, Rove, Hughes, Rice, Card). They put in place an idealogue in NEC (Lindsay). The idealogue and the political crew were wrong. On the outside were the skilled Brandeis types (DiIulio, O'Neil, Greenspan). They failed to prevail with "trigger" oriented self policing approach. They wanted to stop any idealogue approach if it should be stopped if it did not work with set triggers. The killer economic events that were not stopped were: tax cuts, deficits, and war. Worse, now we have SS, medicare, and states not getting support for the foreseeable future. As the spiral down is not checked with triggers, people quit who could solve the poblems. Greenspan has not continued the informal Brandeis effort that was done up to O'Neil's departure. The compression in volatility you see clearly and trade around is not going to go away until pragmatic problem solving replaces the planning by ideals of individuals who have turned out to be incorrect. This is not going to be possible with the handlers Bush is subject to. The compression started seriously when the summer quarter ended. I have worked this mileux for both republican and democratic administrations of 4 four Presidents. What is going on now is unbelievable to a lot of retired past EOP staffers.
1998 - 1.56% 1999 - 1.58% 2000 - 1.91% 2001 - 1.99% 2002 - 2.34% 2003 - 1.60% 2004 - 1.04% (through 2/13)
Are you f*cking high? Look at the fund inflows the last 3 months. Record highs dude, record highs. That's retail money pouring into the market at the highest rate in our history. This is not Bush or big money making the market go higher to win any elections, its call high demand, low supply. When you see those fund inflows start to level off, there you will find your correction. God, sometimes I wonder about people on ET.
$500 billion deficit and 100's of billions more in monetary stimulus. Money is pouring in to the market from everywhere. Thats why the spy never drops. People know that the bill comes due very soon, thats why we go up like a snail with no enthusiasm. But nobody can sell because they know market can't go down either till next year. Volatility will continue to suck. The only thing that can make mkt drop is a currency or bond market crisis. I'm hoping for a disasterous inflation report. But it will never happen. Because they will fudge the numbers. Thats why PPI charts not to be available later in week.
I would not jump to conclusions like that. Yes the fund inflows are at their highs. However you have to respect the fact that there is just a crap load of cheap money being pumped out. It is very possible that the cheap money is allowing the masses to go farther and farther into debt and meanwhile using whatever real actual savings/cash that they have to throw into the market since it is the only thing that is going up today. I do agree that there is some serious Fed and Bush involvement in the market. Bush's administration has a very strong agenda to get Bush re-elected so that the Iraq situation can be finished. Bush has strong ties to the top corporates, particularly oil and defense. I'm sure his administration can orchestrate temporary support for the market and keeping the smart money sellers at bay at least until after the election. Think about it. With the possible financial crisis at hand, the baffling economic situation and the global situations, this market should be making crazy moves just due to the uncertainty of what the hell is going on. Instead it's being kept low key with an uptrend and dead volatility. Just a little strange?