The big funds are fighting surprisingly hard to support the market for their month-end markups. I have heard that this is fiscal year-end for most mutual funds, so perhaps they set aside an extra-large pile of cash to paint some greatly-improved numbers onto their annual reports.
Also, perhaps they don’t fear prosecution by the SEC here in Black October for blatantly running the market up. Since the government is desperate to levitate the market, perhaps the SEC even gave them the wink.
Or maybe Obama’s Plunge Production Team, which struck yesterday afternoon, is being routed by the Republican Plunge Protection Team which is trying to fool voters into thinking that the recession is over.
In any case, holding long positions at the end of the month has been a bad idea lately since the market usually falls when the big funds pull their bids in the new month.
Here is an updated version of the chart that I posted last month in The New Month Massacre, a post that saved you a lot of money (click to enlarge):
The purple arrows point to the beginning of each month since June. Note that the S&P 500 was levitated at the end of each month, and immediately fell in the new month – especially September and October.
Will November play out the same way? It looks to me like there is a rather large mark-up going on now, so maybe it will. If it does not, and the market continues to rally, then that’s a pretty good sign that it is the real deal.