May peace be with you!
The following blurb appeared on the Buzz but as some Minyans choose the News & Views (only), I wanted to share on a slow Friday afternoon.
I was just speaking with a buddy of mine who runs a big fund and he said "So...the tape rallies on North Korea rumors, they're proven false and the market still rips?" I (humbly) offered to my buddy the following thoughts and will share them with ye faithful with hopes they add value.
"I'm not so sure the chatter was the cause of the lift. More likely than not, a gorilla pulled the trigger on a massive (buy side) order and that set off a chain reaction in the fund community. Think about it, if the Gov't of Singapore (for instance) wants to buy $1 billion worth of stocks, they'll scoop offers to get in motion. Reactive hedgies see the upticks and figure that something must be going on and, before you know it, it's a feeding frenzy."
When my buddy asked me what I thought, I told him that I didn't have a clear sense and wouldn't dilute the value of my opinion by making something up. I noted the ketchup (N's over S's) and the relative lethargy in the banks but that's a reach with regard to value added.
The simple--but not helpful--truth is that the tape is being pushed around by order flow and it's always difficult to game invisable catalysts. Unfortunately, that'll likely continue into the new week as traders posture in front of Elmer.
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