A Joyless Rally

 | Dec 02, 2011 | 2:24 PM EST  | Comments
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CNBC notes that the Dow Jones Industrial Average is on pace for its second-largest weekly gain in history. It really was a remarkable bounce, but what is even more remarkable is that so few market players are having that level of success. Sure, there are plenty of folks with some good profits, but the excitement and emotions that we used to see when the market had a big move just aren't there.  

I've written about the joylessness of the recent market rallies in the past, and it is disappointing to see that persist. I hear far more grumbling from traders who are struggling to stay in step with this market than I hear celebration over great trades. Even the bottom-calling bears mostly just find themselves back to even after jumping in too early.

What I ponder is whether something basic has changed in the market. Why don't we don't see a really upbeat mood and excitement over speculative trading? Is it because this terrible recession has taken such a toll on people? Is it because the nature of the market action has shifted so that individual traders no longer feel they have an edge?

It is probably a combination of factors that has affected the mood, but what worries me is whether it will stay that way. Has there been a real structural change in the way the market operates?

One of the biggest changes I've seen lately is how futile individual stock-picking is. The lack of themes, pockets of momentum and wild speculation in junk stocks has been replaced with purely directional trades. Risk-on or risk-off is the focus now, and that just doesn't offer much of an edge for the aggressive trader who enjoys doing research and looking for good trades.

Maybe things will brighten up during the holiday season, but for the second-biggest point gain in market history, it sure is a pretty dull party.

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