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Durudarshan - Investment Analysis

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Are the markets expecting a Black Swan event?

Posted on September 5, 2012 at 5:18 AM
Just hearing of a Black Swan event should not be ominous, although of course it will lead some investors to dream of being quick on the short side. 
 
Last night I was at a presentation in Park House, Finsbury Circus, at the meeting of the Market Technicians Association.  There I heard this phrase, although the notion itself does not seem to have weight at the moment. 
 
I looked at the DOW Index chart and that of the FTSE 100.  Both have had some downward pressure, agreed.  The huge volume on the DOW last night lowered the Index by just over 50 points.  Normally, with a volume of 1 million or so, that much occurs.  But yesterday, the volume was a massive 78 million! 
 
If a Black Swan event were to have occured, it would have happened yesterday.  Now it just shows there are people who are hopeful that the markets will head downwards very swiftly and make them rich beyond the dreams of avrice.  But, as that event did not occur with such a volume, maybe that expectation can no longer hold true?
 
There will be doubts, some people will be quick to hedge their bets both ways now. 
 
The Federal Reserve is not going to open the taps of quantitative easing just yet, and hope there is today that ECB Chairman Mario Draghi will formally announce the acceptance of a Bond buying programme of 2-3 year debt.  It is said that new funds of upto 500 Billion Euros are being readied for this purpose, although it will be used very selectively. 
 
That may dismay those looking for a Black Swan event. 
 
I hope people have not forgotten their Stop Loss orders in case the market rebounds this afternoon.
 
Kind regards,
Duru-darshan.
 

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