SOS Stock Market is never logic or rational

The first picture shows the correlation of 88% for the last 18 months between S&P500 vs Goldman Sachs Commodity Index. Which is against the historical correlation, which is either negatively correlated or no correlation.

MyView

Market is irrational, period. It comprises so many different players, institutionals, speculators, day traders, long term investors, gamblers, substantial shareholders, government agencies. Institutionals normally is guided by consensus or follow the herd, and will always looking at the rear mirror for guidance.

Some shares in Malaysia:

I have seen that market prices goes up because a "branded" investment banker buy that stocks.

I have seen that market prices goes up even the accounts is qualified as going concern.

I have seen the market prices goes up because research forecast double digit growth in earnings, from RM3 mil to RM21 mil, when the actual result is actually a loss of RM31 million few years later.

I have seen market price goes up because of an announcement on a project that screwed the taxpayers.

I have seen CEO announces each the future quarter is better than the previous quarters for a few years and it never turn out to be true, and still there are lot of interest on that stocks.

It is inconclusive, but, for certain stocks, this is how the game is played. Different types of flowers attract different types of bees. Different game rules for different players, period. Only handful are doing genuine business, the rest, just another big casino.

So, don't spend too much time rationalising why certain stocks goes up or down. There is no logic. Some time it follow consensus, sometimes the consensus is too strong it reverse.

Stock market is never logic or rational, period. That is why, it always catch the majority with their pants down.