The NEED to Know, That Which is NOT Worth Knowing

One VERY popular financial news website, which I won't name, but will say, they are independent, anonymous and getting about as much traffic as the Street.com had this to say about "WHY" the market sold off today.

"It was about an hour before the market close, which means it was time for the latest FT rumor. Only this time, unlike the 3 or so times before, the bazooka was not only a dud, it caused the inverse reaction of that intended, and led to a broad market selloff. The reason: according to the FT (and certainly take this with a salt shaker if previous experience is any indication) is that European banks have balked at the prospect of recapitalizing at current levels ("Why should we raise capital at these [depressed share price] levels?” said one eurozone bank boss. "


People don't understand the market, they get worked up on small moves and generally can't see the bigger picture. Because they don't understand how the market works, they constantly are looking for the answer as to "Why the market did what it did today". Wall Street has spent decades brainwashing your parents and their parents and now with the 24 hour news cycle and websites everywhere, it's even easier for them to get their propaganda out.


For instance, take the quote from the un-named website above that states the market fell apart at 3 pm-ish due to a European banking story.

The market did fall apart, first around 2:30 when it couldn't hold the breakout (SPY $122) which as mentioned, creates the snowball effect that took prices down to intraday support, those broke and several tests of that support failed to gain any traction, we saw another head fake snowball sell-off at 3:45, one 30 minutes before the story, one 45 minutes after, but both have clear roots in price action.


Being this is a European story, lets look at the Euro.

At 3 p.m. marked in green, the Euro rallied a tiny bit, there was some selling in to 4 p.m. (marked in red), but not much. So the American markets sold off because of a European story, but the Euro rallied? None of it makes any sense and that's what media is counting on, that you'll take their "expert" opinion to be the gospel. 


The market did what it did for reasons we chronicled all day long, before and after this story. Granted the story probably won't help sentiment, but it wasn't the cause of a "Broad market sell-off". We talked about this possibility-even probability last night!


This was the same website that presented the FOMC minutes as being biased toward QE3, which when the minutes were read, showed a more balanced view, but they have been saying QE3 is imminent every time the "FAD" meets ever since QE2 ended.


Remember the Cramer video I showed you and remember, it's your money, it's your responsibility, don't assume these people know more about the market then you do or then you can with a little research and constant observations.


That being said, after the ERSTE announcement yesterday and now this, we may very well see some real weakness in the Euro. Remember my USO post from earlier today.