Apparently, the big money -- the smart money -- is absent in the last few weeks from the stock market rally. From FT.com:
The March stock market rally that fuelled hopes of a broader economic recovery was deceptive because “real money” investors remained on the sidelines, according to the chief executive of NYSE Euronext, the world’s largest stock exchange.
In rare comments about market movements, Duncan Niederauer said in an interview with the Financial Times that the rally was driven by short-term traders trying to take advantage of high volatility and not by large institutional or other long-term investors.
Despite this, the stock market continues to rally higher overnight (see chart) on earnings reports from GE and Citi. However, the earnings of these companies, as with the other large banks, are suspect. They appear to be consistently doctored for the headlines, while the underlying fundamentals remain weak. This is keeping the big money on the sidelines, unconvinced. The smart money is expecting worse to come.
Short-term traders aren't interested in fundamentals. They trade the news. I should know because I'm one of them!
