What causes these huge short term shifts in the Dow?

[PAULinSC]

Between 3:06 and 3:28 there was a +171 point swing

Between 3:28 and 3:48 there was a -141 point swing.

I'm not too familiar with the inner workings of the market, so can someone explain how these large shifts are taking place in such a short period of time? Is it me or do things seem much more volatile these days?

Also, who's making money and who's losing money off this?

 

[Dr.3D]

Panic!

 

[Truth Warrior]

Dead cat bounce(s).

 

[raiha]

The whole thing is based on negative emotions. Greed when it's working. Fear when it aint.

 

[acptulsa]

Panic!

This causes it to go down. Irrational exuberance causes it to go up.

 

[theseus51]

It's the bandwagon effect. In turbulent volatile times like now, people are unsure how to act. They see the market going up, lots of people (and individual investors) buy, driving up the price further. But when it gets a bit too high, some people want to take profits, and start selling. And the reverse happens as people see stock prices falling, they sell their stuff too.

In more stable markets, people tend to hold longer, but in volatile times, investors are much more fearful, and every little report, or fed action, or fluctuation causes overreactions. It kinda feeds on itself, and yeah, that's what causes wild fluctuations in short periods of time.

 

[AceNZ]

I'm not too familiar with the inner workings of the market, so can someone explain how these large shifts are taking place in such a short period of time? Is it me or do things seem much more volatile these days?

Lots of reasons. Basically it comes down to concentrated periods of buying or selling.

Also, who's making money and who's losing money off this?

There are lots of parties that could be involved: hedge funds, mutual funds, sovereign wealth funds and the Plunge Protection Team -- plus many more. The derivatives market, including options and futures, can also drive stock prices.

Existing holders of stocks or derivatives are also impacted.

 

[satchelmcqueen]

greed and losts of it. i just cant belive how easily wallstreet just dont care how they effect peoples lives and devaluse money based on assumptions and other crap...greed, panic....

 

[Zippyjuan]

Without knowing the exact timing, I would guess the big sell-off came when the news of the Bear-Stearns troubles hit the trading floor. Brokers are very nervous right now and are selling on any sort of negative news these days.

 

[NaT805]

Don't forget when the fed inject's money it changes as well.

 

[OptionsTrader]

A large fund hit with a margin call can be forced to unload long and short positions even when the market timing is anything but ideal and there is not a lot of demand for what they are unloading. Can move prices up and down hard quickly.

 

[ToryNotion]

I was reading 'Cogitations' (Albert Jay Nock) the other day. It only has a little of his economic writing but what is there is very good. Some key points he makes and my comments:

All economic activity is an exchange of production for production. Money is an intermediary and
and convenience and where we've gotten off track is by focusing on money and creating ways to make money off the intermediary and the convenience. The whole Ponzi scheme of finance has very little to do with actual production of goods and services people need to live. Keynes shifted the focus to demand/consumption away from production so now we are at the mercy of consumer and government (deficit-driven) spending and the credit that makes that spending possible.

 

[Corydoras]

Quite a bit of trading is automatic and done by computers.

 

[Chester Copperpot]

Between 3:06 and 3:28 there was a +171 point swing

Between 3:28 and 3:48 there was a -141 point swing.

I'm not too familiar with the inner workings of the market, so can someone explain how these large shifts are taking place in such a short period of time? Is it me or do things seem much more volatile these days?

Also, who's making money and who's losing money off this?

The process you inquire about is caused by the specialist in each particular stock. He is the person who actually buys and sells all the stock for that particular stock. They set their prices based on their buy and sell orders and profit accordingly.. If you want a detailed analysis on this process I recommend you reading "The Wall Street Jungle" by Richard Ney... It may be out of print or may be in other additions.. This guy was only 1 of 2 people banned from the Tonight Show with Johnny Carson... His life was threatened many times.. Because he exposed the specialist system and the manipulation they were able to do to all the stocks in the market.. If you want more info feel free to PM me.

 

[kyleAF]

I was reading 'Cogitations' (Albert Jay Nock) the other day. It only has a little of his economic writing but what is there is very good. Some key points he makes and my comments:

All economic activity is an exchange of production for production. Money is an intermediary and
and convenience and where we've gotten off track is by focusing on money and creating ways to make money off the intermediary and the convenience. The whole Ponzi scheme of finance has very little to do with actual production of goods and services people need to live. Keynes shifted the focus to demand/consumption away from production so now we are at the mercy of consumer and government (deficit-driven) spending and the credit that makes that spending possible.

I was just reading that, too!

A great collection of his words.