Today’s close was especially odd.  Several sell programs hit as the market was closing, followed by a huge buy program which took the averages up at the close.  These programs are triggered by computers that are programed to take advantage of seemingly minute differences. The differences could be between bonds/stocks, options/stock, volatility/stocks, insurance programs, convertible bonds…..you get the idea.  The software takes the orders directly to the market makers and/or floors.  Programs play havoc with traders as it is impossible to know, for sure, that they are about to be activated.   Yesterday, for example, a rumor started that there was going to be a market on close sale of huge proportions.  Never happened.  But a lot of traders, I am sure, started jockeying their positions around, based upon the rumor. And today’s action must have driven the boys in Chicago, where they trade all sorts of derivatives, absolutely nuts.

Our markets are quite overbought and am sure all sorts of shorts were put on over the last two days.  These buy/sell programs certainly will stress the shorts.  We have come a long way, very fast, so we need at least a rest, if not a correction.  Scratch that need; it would be healthy but not necessary. Forgive me.

Lest the recent market surge makes you complacent about our economy: http://www.calculatedriskblog.com/2009/04/new-homes-demolished-in-victorvill
e-ca.html

The photo is Ocracoke light house.  This is a beautiful sand bar of an island about two hours, by ferry, off the North Carolina coast.  It is the southern most island of the Outer Banks. We leave tomorrow to catch the ferry from Cedar Island.  We will catch up with our old New Canaan/Vermont friends, Peter and Helga, who have rented the same cottage on the island for thirty-five years. Take a look. Ocracoke Island Web Site

No posts on Monday and Tuesday.  Have a wonderful, wonderful weekend!