Stock Markets Exposed

What causes sudden big dips in the stock market, when there is no bad news?

Like today, there's this big dip all over. What factors trigger that? Some people say its manipulation by institutional traders. What are those, and how do they do it? Ed> Yeah, I'd understand if there were bad news involved. But I'm referring more to times when there aren't bad news and the market still have a sudden dip

Public Comments

1. These dips you are noticing could be the result of more people selling stock than those buying, causing a rise in supply and a drop in demand. Institutional trades are usually mutual funds or insurance companies and they pool the money of many investors and therefore have a large stake in the market and if they sold their stake in a company on the DOW it would refelct on the DOW's price negatively as if millions of people had sold their shares. Dow=Dow Jones Industrial Average, top 30 companies in the U.S. stock market from many different industries.
2. The stock market is very emotional. Anything that is big news around the world will cause it to dip. Such as natural disasters (Hurricanes, Cyclones etc...), The war in Iraq, and any other factor that can potentially disrupt service of any kind.
3. No one really knows the answer to that, my friend. Don't listen to anyone who says otherwise. The day-to-day, hour-to-hour movement of the market are essentially random. One or two or one hundred things may start the ball rolling or not. If anyone "knew" what was "really" going on, they could trade ahead of the market -- they would be very, very rich. Do you live in a big city? Ever been in a traffic jam that seems to have no cause, but goes on forever? That is the stock market: what you see at the top <indexes up down flat> is the result of millions of people making individual decisions about buy-sell-hold; some times together, sometimes opposite; sometimes for similar reasons, sometimes not.
4. How do you know there's no bad news? Markets are quite nervous these days so even the suspicion of bad news could trigger a sell off.
5. The talking heads on CNBC frequently have reasons for why the market dips. Sometimes they make sense, and sometimes I think they are BSing. I've also seen big market up days, for no apparent reason. Most investors seem to accept those without question. The market is driven by 'fear & greed'. And it's not always easy to figure which is incharge.
6. What one person at one level of knowledge considers a "normal" day, could and does look completely different in terms of risk to a more sophisticated and/or specialized investor. Likewise, one man's good news is another man's bad news. How much it influences each side's perception of the market, and resultant buy/sell acitivity, determines where the market will head for a given time period.
7. If there are 100 buyers buying at least 1 stock and 200 sellers selling at least 1 stock then you get a big dip. It's not exactly rocket science.
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