"Herd behavior, or the tendency of individuals in a group to 'follow the trend,' has frequently been observed in equity markets. Herd behavior in investors leads to a convergence of action." [Yan, Zhao, Sun (2012)]

"Theoretical models on herd behavior predict that under different assumptions, herding can bring prices away (or towards) fundamentals and reduce (or enhance) market efficiency." [Yan, Zhao, Sun (2019)]

For anyone still shaking their head over the recent eye-popping, one-way trends in the stock market, the academic assessments of "herd behavior" above may provide one of the best summations I've seen.

Or, if you prefer something a little more pop culture oriented, there is Eddie Vedder's view on the subject from the 1996 Pearl Jam hit Do The Evolution... "I'm the man buying stocks on the day of the crash... It's herd behavior, uh huh, it's evolution, baby." (P.S. If you are looking for a little kick-start to your day, this video will definitely do the trick.)

Blame It On The Computers?

To be clear, I have never been involved with a high-speed or high-frequency trading shop. As such, I have to admit that I do not know all the ins and outs of how today's algorithmic trading programs function - or even what triggers them. However, I have done a fair amount of research on the subject and as such, I am pretty confident that algo-induced herd behavior had a hand in both the slow-motion crash that occurred between 12/4 and 12/24 and the ensuing joyride to the upside that began on 12/26.

I know, I know. We can't blame everything on the computers. And yes, there were definitely "issues" that traders and investors had to sort through/deal with in December. Not the least of which was the fear that a policy misstep from ...

To be sure, it is rare to see the mood of the market swing from the depths of despair seen on Christmas Eve to the "happy days are here again" feeling of last week in such a short period of ...

The bad news is that after a rather rambunctious rally, the S&P 500 remains -8.9% from its all-time high. The good news is that after the -19.8% shellacking that ended on Christmas Eve, the stock market now starts the week ...

After a very scary decline and then an impressive rally, the question most investors are probably asking themselves is, where are we now?

In order to get our bearings, let's review where we've been. Recall that as of the market ...

Well that was fun. Don't look now fans, but after Friday's joyride to the upside, the S&P 500 is up nearly 8% from its Christmas Eve low and is now down only -13.3% from the most recent high water mark. ...

I ended last week's pre-holiday missive with the following: "It is easy to say the bulls are due. Really due." And as if right on cue, stocks proceeded to bounce hard the following session with the Dow Jones Industrial Average ...

I attended a holiday gathering for one of my advisor clients on Friday evening. While everyone appeared to be in the spirit of the season, when the conversation eventually turned to the market action, the mood quickly changed.

In talking ...

I'm not sure whether it was the late Marty Zweig or his buddy Ned Davis who originally coined the phrase, but it appears that after yesterday, anyone long the stock market may now officially be fighting both the Fed and ...

It was a very busy weekend in St. Louis, visiting our grandson, daughter and son-in-law, so I'm going to keep the subjective side of this report short and let the models and indicators do most of the talking. But first, ...

The headlines blared that stocks soared Wednesday in response to improvements in the trade war. Apparently, China was making noise about a new policy designed to increase access to the country's economy for foreign companies. Diving into the story, it ...

It was another wild ride on Wall Street yesterday. Stocks stumbled hard out of the gate, following the lead of most global markets. By 11:00am EST, the DJIA was down more than 500 points, had broken below the October lows, ...

Due to system maintenance, updates to several key data/models in our indicator boards were not available over the weekend. Thus, our weekly review of market indicators will be postponed until tomorrow morning. But as the title of this morning's missive ...