Wall Street's Carnival Games
August, though it may have seemed like quite the violent roller coaster, was, when all was said and done and tallied, more of a sedate little carousel.
In a carnival of sights to see
All the cheap thrill seekers
The brokers and the dealers
They crowded around me
-Carnival (Natalie Merchant)
On Labor Day Weekend, there's an annual chili cook off and carnival in Malibu.
My four-year-old daughter loves the thrill of it all and like every kid gets caught up in the excitement: the roar of the crowd and the machinery, the sugar of the cotton candy and the neon lights, the cranking of the joy rides, the wink and wince of the hall of mirrors.
Not much different than Wall Street really, except on Wall Street the carnival barkers and snake oil salesmen wear Prada.
And on Wall Street the ride can be quite costly and occasionally has been know to fling a few riders to the ground.
August, though it may have seemed like quite the violent roller coaster, was, when all was said and done and tallied, more of a sedate little carousel. That is, if you exclude all but the first and last day of the month. For all the snarling dragons and painted horses of August sessions, the DJIA left us off pretty much where the month started. On August 1, the DJIA closed at 13,362. Friday it closed at 13,358.
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But at least the Dukes made out. Right? Perhaps not, judging by the price action of the brokers: Randolph and Mortimer may have to sneak back into their trading turrets wearing gorilla outfits today so as to avoid the stiletto stares of those likely to see their eight figure bonuses cut this year.
For the Dukes, August was, well, more like the Dukes of Hazzard.
Speaking of carnivals, Fridays in August have become quite the little weenie roast for Hoofy. First, there was the August 17 expiration hoe-down called by Bernie and the Jets discounting some elixir promising to grown hair on the bulls' chests. Then, there was last Friday's one-two punch by Bernanke and Bush that is trying to turn a pig's ear into a silk purse.
Of course, all the G-Men aflutter about Fridays is probably just a coincidence, just happenstance. I mean, who would want to shoot Boo out of a cannon, much less rip his face off, before options expiration and in front of a long weekend?
That's a question more and more market participants seem to be cozying up to as the Boyz are back in town starting today.
There seems to be some comfortable conjecture that August 16 was a spike volume bottom, and that last Tuesday's stab down was a successful test of sorts. No matter that even if this is only a correction it has not met the benchmarks for the average duration of corrections over the last fifty years. Hey, but who's counting?
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The hourly S&P shows a 1-2-3 Swing-to-a-Test of the August 24 retracement high just as the August 24 peak was a 1-2-3 Swing-to-a-Test of the key August 8 high.
Click here to enlarge.
History? As the market enters the cruelest market month, September, followed by the spookiest market month, it will be interesting to see what tricks the ringmasters and purveyors of stuffed animals have in store.
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