MARKET BARRIER
Why the Dow falls short of highs
Dear John: I have a question that has been bugging me for years about the US stock market, ever since the mid-1980s.
Every time the Dow Jones industrial average approaches a new major threshold — such as 5K, 10K, 15K, 20K, etc. — by the end of the business day, the market stops just short of that “psychological barrier.”
Analysts explain that investors are fearful that once this barrier is reached, a major sell-off due to profit-taking will occur.
While that might very well be true, I am most curious about how — with hundreds of millions of shares of stock being traded by tens of thousands of investors — do all these unrelated actions collectively always stop short of the threshold just in time for the end of a business day?
I’m just wondering what other mechanism(s) might exist to explain why this always seems to happen. Any insight would be appreciated, and thanks. R.M.
Dear R.M.: Quite frankly, that’s not the phenomenon that I see happening.
What I do see is that when the market is getting close to a new milestone, like 20,000 on the Dow, traders push to propel through the number. Sometimes they fall short, and it could be because they fear that “sell” programs on computer might be tripped once the milestones are breached.
You have to remember that a lot of today’s trading is computer-generated. And a lot of those buy and sell orders get triggered by an event — whether it’s a key word in a headline on the financial wires or the stock indexes reaching a certain level.
So it’s not so hard to imagine that these waves of stock trading would look coordinated, since a lot of these computers could be programmed to be looking at the same event.
Dear John: I came across this crazy subway train that was painted like a library. What’s up with that? N.P.
Dear N.P.: I hadn’t heard of this until I saw the photos in The Post. Truly odd, but refreshing, considering the graffiti we used to see on trains and the ads that usually take up the overhead space.
This is a six-week promotion by the MTA, Transit Wireless and the New York, Brooklyn and Queens Public Libraries. It provides commuters with access to hundreds of free e-books and other things to help them enjoy their summer commute.
To participate, connect to Transit Wireless WiFI through your network settings, then click on the SubwayLibrary.com prompt to start reading.
In case you are wondering about the train’s décor, the interior is wrapped to look like the Rose Main Reading Room inside the 42nd Street branch of the New York Public Library.
The train is running along Sixth Avenue and Eighth Avenue on the E and F lines.
Wait long enough, and it eventually will come along.