Why no rejoicing?
You'd think a 206 point gain on the Dow would be cause for celebration (in many households I'm sure it was). But so far today there is no follow-through buying on Wall Street, so maybe yesterday's rally was more of a one-day wonder than a sign of a real change in sentiment for the better.
Barry Ritholtz, Chief Market Strategist at Maxim Group, just sent a note to clients with some smart thoughts to that effect:
"I prefer more measured market gains to spasmodic leaps upward. It simply is healthier to see rational moves higher -- i.e., five 40-point days over the course of a few weeks -- than one 200-pointer. These emotional buying frenzies have the whiff of panic to them, and that tends to have unfortunate consequences on both sides."
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I actually like the increased volatility, because it shows that the market now is finally paying attention. Markets get a little dangerous when they remain "complacent" over a long period of time.
The VIX and the VXN have shown persistent signs of complacancy via low volatility for most of 2005. Now that we've seen a spike, we can get the short term sell-off out of the way.
Posted by: The Assetman at April 23, 2005 12:56 AM