My comments will be brief today, since I’ll be on my way shortly to Denver for a talk on Hidden Pivots before the Denver Trading Group. The major indexes stalled once again at the modest rally targets I’d flagged for Wednesday. As a result, the short offers we had in slightly above Wednesday’s close went unfilled. Again. Despite the apparent weakness, my hunch is that shares will move at least somewhat higher before they yield to gravity. I wrote here earlier that although there appears to be little enthusiasm on the part of buyers, the drag on prices they might otherwise exert is being more than offset by a relative dearth of fearful sellers. Complacency rules right now, and until it is disrupted by somethiing that no one can predict, stocks will probably have little difficulty marking time between short-squeeze days.

As Bob Prechter has noted, the complacency can be ascribed to the fact that most of the trading these days is being facilitated by Other People’s Money. Hedge fund managers, driven by performance benchmarks of the past, are having a losing year, and this has created additional pressures to keep the money working at all times. As such, the money managers have grown less discerning over time than you or I might be about valuations. Instead, they have quite evidently thrown caution to the wind, chasing momentum whenever and wherever they are able to create it.

Prodigious brains and talent have been applied to the development of the black box systems that have been duking it out in the securities markets each day. Yet, according to hearsay, and with some statistical support, we know that the algorithmic traders on average have been losing money this year. Despite this, or perhaps because of it, we can be certain they will remain fully engaged until the day the bottom drops out. We can also be sure that, when that happens, most of these guys will be on the wrong side of the trade. The ones who have been around for a while probably know better than to think they’ll be able to sidestep the inevitable cascade. Even so, since they are playing with OPM, they are probably not nearly as concerned about the outcome as we might wish them to be.