Conviction, Sentiment, and Market Moving Rumors

Wednesday, August 23, 2006 | 04:30 PM

Rev Shark and I have disagreed on the Sentiment Question -- are there too many Bears, or too many Bulls? -- several times over the past few months. However, I am starting to come around to his position that market participants are becoming on average fairly dour.

Whether this is a change in the market, or a change in me, I cannot say. And any conclusions drawn in August are suspect, given the ultra-light volume -- at 3pm, less than a billion shares changed hands on the the NYSE -- and the 3rd string rookies manning the terminals.

But despite all that, one really has to marvel over the lack of conviction today. After the dissappointing (but not unexpected) housing data came out today, the market seemed to falter a bit, but then it recovered.

It wasn't until CNBC announced the Bloomberg headline of an Iranian nuclear breakthrough (See this story at TSCM) that markets seem to have stumbled more significantly.

Now, I dont 'believe a word of that, and I assume most others don't either. If many people did, then the market would be selling off much harder than it is.

But I am surprised at the ready willingness to dump stocks on so flimsy an announcement by the Iranians the day AFTER their UN deadline passed. Its exactly the sort of thing you would expect to hear from them.

The fast triggered response is pretty widespread, with up/down volume -- what little there actually is -- rather negative. So while I want to be cautios about reading too much into anything this (and next) week, I still find the lack of conviction rather surprising.

Maybe Rev is right after all . . .


Wednesday, August 23, 2006 | 04:30 PM | Permalink | Comments (20) | TrackBack (0) add to | digg digg this! | technorati add to technorati | email email this post



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"Lack of conviction" or perhaps "wait-and-see," really does seem a better way to characterize market action right now: rhetoric aside, it's less about cult of the bear vs. cult of the man-cow and more about just plain being on tenterhooks.

Posted by: RW | Aug 23, 2006 5:06:11 PM

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