As the market opened this morning, it seemed something was not quite right in techland, and within minutes the tape began to melt. By mid-morning, the NDX had slumped more than a percent, lead by Akamai, which saw its shares shed 5% ahead of tomorrow's earnings call. Unfortunately, the damage was contained in tech. With the S&P 500 hovering around par for the day, it became clear that we were not witnessing the beginnings of some grand meltdown. Lo and behold, the NDX rallied all the way back to even before finishing the day modestly lower.
I am not a believer in the existence of the fabled Plunge Protection Team, but given the action seen today, I can certainly understand how such beliefs are reinforced. Every impulse of selling is immediately met with strong bids. Even Research in Motion... with a valuation highly-primed for disaster... was looking ready to unravel two weeks ago, but has since put in a 12% rally.
Furthermore, volatility in financial assets continues to be contained near all-time lows, so in essence, traders are being finely rewarded for holding riskier assets. The less the implied volatility, the higher the price goes, so risky assets have more room for price appreciation. At some point, probability will catch up to these traders.