Robbie From what I have read so far, hedge funds and others are still under pressure to liquidate positions and raise cash which makes the final trading hour so treacherous. Even if there is a positive feel - sentiment to rally, the hedge funds are still likely going to be selling into the rally which is likely go to slow - stymie things to the upside. I know that there is plenty of cash on the sidelines in Mutual Funds and in the accounts of individual investors, but it is going to take quite a bit of buying power to overcome the forced selling. We overshot to the Upside and now we seem likely to overshoot on the Downside. The most surprising thing to me is how the <i>Masters of the Universe</i> had to use so much leverage to achieve their outstanding returns over recent years. With a lesser amount of leverage going into the future, it will be interesting to see what they are able to accomplish.
The idea of capitulation is that all the speculative and/or stupid money comes out of the system, at which point you hit a bottom, and then the smart money comes in. But if everyone is saying the bottom is coming any day now and people are looking for everyone else to capitulate, why are these major investors going to sell at somewhere close to the bottom? It seems me capitulation can't happen if people are looking for capitulation because everyone will just be waiting for everyone else to sell.
Had to steal this post from a Yahoo board: "It is so absurd to hear commentators as well as people on this board spew endlessly about "where is the capitulation". It's like saying someone who has been bleeding to death for two months needs to be dramatically blown up by a grenade for death to occur. It's been the worst month in the market since WW II. Capitulation ? That's been happening every day spare one or two for the last 30 days. This market right now is absurd as it was in the other direction at NASDAQ 5000 ... completely overshooting reality. For those who don't think this has been utter capitulation already they should do one of those Weekend Update "Really" skits with Seth Myers and Amy Poeller."
Yeah, but even using your logic people will have to sell regardless of how much they will lose. But, I can see what you're saying, people are looking left and right, expecting them to sell and prices to increase before selling.
What are you seeing that? From what I can see S&P Futures are +6.3 and DOW futures are +59 (from CNBC World). Here's 20 minute-delayed futures: http://money.cnn.com/data/afterhours/index.html Or, in 5 minutes, it will be here: http://money.cnn.com/data/premarket/index.html
The major investors are the hedge funds, and they control 50-60% of daily volume. When major investors in these funds redeem their assets, the funds obviously have to liquidate positions at very little discretion. On top of this the hedge funds will start to run into margin calls as liquidity ratios have been depleted from their main accounts. This leads to a vicious cycle of further selling and dropping prices.
Has anyone seen what's been going on with VLKAY in the past couple of days? Madness! Yeah that's right. VW was briefly bigger than XOM in market cap.
Yeah, I've been watching that. They're one of the few car companies that are doing reasonably well (even though they make crap cars!). Porsche's deeper investment into them didn't hurt, either. There have been days I've watched that stock jump some nutty amount for the size of the company it is.
What in the wide, wide world of sports is a-goin' on here? they go from 50 to 200 and to xom-level market cap in 2 days b/c porsche is investing some more money in them? like DoD said, how can a company that big do that?
Massive short squeeze, hedgies got taken out back and slaughtered following Porsche's announcement. I'm thinking of going short, but that would obviously be a bad idea if the market pops.
Right - but this wouldn't all happen at once. So it doesn't seem like that would be the "capitulation" event everyone is looking for. That's what you're seeing with this daily slow bleed.
