Friday, October 28, 2005

Why Did The Market React Positively Today?

Dow closes up 172 points and begins its tear upward after the indictment is handed up? You may be scratching your head trying to figure out why.

I've worked in trading and the financial industry for 10 years now and this is no surprise. The market is reactionary and hates to be in limbo when a big news item is pending. "Buy the rumor, sell the news" is an old adage, yet in this case there was a lot at stake and the lock-tight seal on the investigation gave traders no edge on which trail to speculatively follow.

Politics aside, and from a market standpoint, this was good news. I can assure you it would have been a different matter if Rove had also been indicted.

Which, I believe, means there may be some hard days on the market in the near future.