If There Are No Bulls, Then Who Are the Buyers?

by Rick Ackerman

The news media and the pundits flailed around over the weekend trying to come up with reasons why the broad averages have rallied to within 10%-20% of record highs even though the global economy could be headed into a depression. ZeroHedge is usually able to provide plausible answers to such questions, but here’s an attempt that fell short. It places commodity trading advisors at the center of the action: “CTAs, which are computer-driven models, do not care about such trivial facts as mass layoffs, millions of people infected with a deadly virus, and instead they only care if others are buying at which point they too join the buying frenzy.”

I agree that CTAs don’t care about facts, even world-changing ones. I also agree with the author’s prediction that stocks eventually will fall much, much lower. But who are the “others” he says are attracting momentum players? And how could they rally stocks with sufficient vigor to not only overcome intense hedge-fund selling, but to build velocity against it?

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