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9/23/2005
Market Tales of Summer, by Victor Niederhoffer

It is interesting to reflect on the mysteries of the market, the amazing inventiveness with which she confronts you with new problems of a extremely trying nature, the kind that remind you of a very good mathematical challenge, the kind that appear for example near the end of most standardized aptitude tests. A case in point was Aug. 10, when the S&P opened at 1247 from its previous close of 1241, moved up to a high of 1259.5, then down to a low of 1235.5 and closed down a mere 0.5 point from the previous day's close of 1241. If the all-seeing eye could write about how lives were made and lost, hopes realized and frustrated, emotions elicited by such a move, it would be a fascinating novel and slice of life in the summer of '05. Looking at the 31 most similar events to such a day, I find that the average move some three days later -- down 1 percent -- not overly sanguine.

The gyrations on Sept. 15, and the fit of its price in the summer confabulation, was another tale that our great storytelling novelists would have been proud to have concocted. The close at 1215.9 in the S&P was the lowest of the previous 14 trading days but 0.9 higher than the 1215.0 close 15 trading days before on Aug. 30 and higher than the 1212.4 close on Aug 26, two trading days before -- but except for that, the lowest since July 7 close of 1208.8.

What does it all signify? Only the Shadow knows, But a little bit of counting can help. Indeed, one of the best ideas I had was to bring Adam Robinson, founder of Rocket Review, on board a few years ago to figure out just what the market wants you to answer in such situations. This is always a very good exercise in meals for a lifetime.

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