Why Does the Market Feel Weird?

Sometimes, with the market, it’s just a feel that something’s off.

Verity Jane Smith | Brand X Pictures | Getty Images

After years talking to people all day who invest and trade, and watching my own irrational stock screen, you know it when you see it or feel it.

This is one of those times, just weirder than usual. As I tweeted out last night (embellished in more than 140 characters): Good is bad (SodaStream has blowout numbers and the stock goes down), bad is good (Green Mountain has horrible numbers and the stock goes up) and a whole bunch of stuff simply doesn’t make sense.

Conflicts abound:

Shorts complain they can’t get stocks to borrow to create a short position.

Yet as Zero Hedge mentionedthe other day: Short interest in the Powershares QQQETF “is now at its lowest since October 2000” while short interest in the SPDR SPY ETF is at its equal lowest since October 2007.

Yet (and I hear this repeatedly) longs complain they can’t find stocks to buy.

Then you get the Knight Capitaltrading snafu; a market that appears to be maneuvered by mysterious algorithms; oh, and yes — Europe and a market seemingly tied to an endless stream of macro headlines that have almost become numbing like white noise.

And while I don’t have the hard numbers, I’d go so far as to say it appears the market isn’t as correlated to itself as it was a year ago, when everybody owned the same stocks. That makes it better for stock-pickers (the minority, these days) and worse for everybody else.

(And note: I didn’t even mention Bill Gross of Pimco’s recent commentarythat “the cult of equity is dying.”)

Talk about destabilizing and dysfunctional.

“People are weirded out,” says Phil Pearlman, a psychologist by training and executive editor of StockTwits. “You’ve had 12 years of poor market action. Even the hedgies can’t get it right. You have seen mutual fund outflows for so long."

“The world and the market have grown infinitely more complex and perception follows price,” Pearlman added.

Minyanville’s Todd Harrison, who always has a handle on the mind of the market, sums it up this way: “Financial fatigue” combined with “maximum frustration.”

Both Todd and Phil are in the camp that somewhere, when this all clears, something good will happen (as in the market going higher in one of those “make sure you have dry powder” moments.)

The downside: All the rest of whatever is driving so many people nuts first has to clear, which is why this feels like one of those inflection points that we may not forget anytime soon.

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