Put down the flame throwers, I think this is a ligit question, and for the record what I know about the Stock Market/Wall Street can be engraved on the head of a pin with room left over for the Magna Carta.

Now, that said, in my pea brain, it seems to me that over the past months, the DOW gets high, 11,500, 11,800, stays in that range for a short time, then all of a sudden theres a big sell-off, then stays there for a time. It drops to 10,200, 10, 400, etc. and stays there. Then it slowly climbs back up again and the process repeats all over.

It would seem to me that some one or ones wait till their holdings hit a certain level, then sell, take the profit and when things get cheap again, it's back in to buy at the reduced price.

If someone does this in a private business this is called "skimming" so, who is making the money here with this up-down routine with the Stock Market?

-- Richard (Astral-Acres@webtv.net), February 09, 2000

Answers

Richard:

It's called buy low, sell high. This is how you make money in any market. I fail to see your skimming analogy working here.

-- Jim Cooke (JJCooke@yahoo.com), February 09, 2000.

Richard,

If this were true, the entity that would make money would be whomever was selling near the top, only to buy back in again lower to repeat the procedure.

That being said, it would be tough indeed to be able to control the market like that. The selling at the top would always run the risk of getting out of control. That in turn, would lead to a much larger, possibly uncontrollable, drop.

Are there entities that want the market to go up?

Sure.

Do they have the financial ability to push the markets at certain points in time?

Some do.

Can they do it forever?

I don't believe so.

-- J (Y2J@home.comm), February 09, 2000.

What's happening is that "joe consumer" continues to "pile money in from the sidelines" and is getting killed in the process. There hasn't been a whole lot of focus on this process from the bubbleheads, but the dow has now done this twice in the past two months. Ask yourself if every mutual fund investor out there is checking his fund NAV daily? Ask yourself if ALL mutual funds own only NASDAQ stocks? How many billions of DOW stocks do you think they own? How well do you think they're doing YTD? Why is CISCO worth more than GE?

The real test is going to arrive when JQ public gets his second or third mutual fund report telling him he's down for the quarter again. Or perhaps we will have a break of some size here shortly.

From the oilpatch, I offer this up.

Never pull a gun out unless you're willing to use it (this one's for you Billy Richardson). Don't look for oil to come down any time soon.

-- Gordon (g_gecko_69@hotmail.com), February 09, 2000.

Gordon:

How about starting a new thread on your thoughts, assuming you have time amidst such a volatile (sic) market. TIA.

-- Total Doomer (sky@falling.com), February 09, 2000.

IMHO " skimming " is not descriptive enough... how about " skidding " you know that bark you hear once your flight touches down....

-- kevin (innxxs@yahoo.com), February 09, 2000.

Richard Good observation. This game's so common it's got a name - Distribution. The big players unload their stocks to the little guys at the top. You can watch it happen by looking at daily graphs of, say, the Dow. Classic distribution is a sharp rise during the first hour of trading (amateur hour), nothing real spectacular most of the day, than a sharp drop from 3pm to 4 as the big guys sell.

-- rebel (with@ina.cause), February 09, 2000.

Many years ago, Richard Ney, a maverick wall street guy, insisted that the specialists (the guys on the floor) fixed the prices. Essentially he said that it's not supply and demand that determine price, it's price that determines supply and demand.

I think that is a possibility, since the stock prices have had no relationship to reality -- DIVIDENDS, much less earnings -- for decades, so what difference does the price make? Other than for the fluctuations to generate profits for those in the know?

Call it skimming, scalping, whatever.

The average person doesn't make money because they never take a profit. They buy a stock, and if they're lucky, it goes up. They get all excited, but do they take a profit? NO! Then the price falls, and they ride it all the way back down. THEN, discouraged, they sell, often at a LOSS, where if they had sold earlier, they would have had a profit.

The pros know you have to take profits to actually make money in reality, not just on paper -- the price goes up they sell; it goes down, they buy back; goes up, sell....

If you want to know how you, as a little guy, can do the same, look up Robert Lichello's "How to Make $1,000,000 in the Stock Market Automatically" on Amazon. (Don't be put off by the lurid title.)
And/or check out http:/www/execpc.com/~oldcat/

-- A (A@AisA.com), February 09, 2000.