Dow Jones Industrials

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Dow Jones Industrials

Post  Pez on Mon Apr 12, 2010 12:18 pm

ok... Here's the thing...

The DJIA (incorrectly referred to as "the market") was around 6,800 this time last year. It's now close to 11,000 and will likely cover that this week. However, the volume of the market (the number of transactions each day) is extremely low. Even the 52 week average volume is half what it was a year ago.

Over the last several weeks, the volume has been about 150M or less, with an average of 200M & change. A year ago, the average volume was about 400M... That said, my conclusion is that there is a great deal of money that is sitting outside the stock market.

How will this money re-enter the stock market in any way other than buying stock? An activity which according to the purset bit of supply and demand our economy sees, will make share prices rise. So it would seem that once this money does re-enter the market we are in for perhaps unprecedented share price among the 60 DJIA stocks.

What am I missing, please keep comments apolitical, if I may...

Pez
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Re: Dow Jones Industrials

Post  Scooby01_98 on Mon Apr 12, 2010 4:58 pm

A lot of companies are flush with cash right now due to the cut backs from the slow economy. They are announcing major buy backs of there own stocks. Part of this is artificially raising the current stock prices. I don't see the individual investor back until non stimulus growth in the GDP

While buying back there own stock is good. To me this shows they are not ready to spend there cash on new employees or expand there business.
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Re: Dow Jones Industrials

Post  Pez on Mon Apr 12, 2010 6:01 pm

I thought something similar, but for that to be true, I think the volume would bear that out... even the average volume on the DJIA is low, and gets lower every day... including today... average is 200M and today was 150M.

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Re: Dow Jones Industrials

Post  Scooby01_98 on Mon Apr 12, 2010 6:49 pm

Do those buy backs go through the market or do they record a different way? I think those might actually be recorded a different way and not be part of the daily volume. For example a tender offer I believe is recorded a different way than a open market purchase. Most buy backs I believe are tender offers.

i.e.

1. Tender Offer
Shareholders may be presented with a tender offer by the company to submit, or tender, a portion or all of their shares within a certain time frame. The tender offer will stipulate both the number of shares the company is looking to repurchase and the price range they are willing to pay (almost always at a premium to the market price). When investors take up the offer, they will state the number of shares they want to tender along with the price they are willing to accept. Once the company has received all of the offers, it will find the right mix to buy the shares at the lowest cost.
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Re: Dow Jones Industrials

Post  Pez on Tue Apr 13, 2010 9:34 am

Dunno... it's possible, but I would think "off the books" trades would be uncommon if legal... I understand a thimbleful of the ocean that is the stock market. My portfolio broker even late last week (actually up 0.16%), from being down 30+%...

A long way to go...

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