'People are dumb, panicky, dangerous animals'

One of my favourite films is Men in Black. In case you don't know, it's about men dressed in black suits who secretly protect the Earth from aliens. In the film, the new recruit (Will Smith) asks the veteran why the government doesn't tell us about aliens. He says: 'Why the big secret? People are smart. They can handle it.' The veteran played by Tommie Lee Jones replies: 'A person is smart. People are dumb, panicky, dangerous animals.' The past week in the stockmarket proved Jones to be correct - at least in so far as panicky and dangerous goes. Whether the hordes of sellers also turn out to be dumb remains to be seen but it reminds me of the advice that a successful orchardist gave my father many years ago. At the time, the area was in the grip of a serious downturn and many orchardist were pulling out their pear and apple trees and selling off their land but the successful orchardist was planting new trees. When dad asked him why, the orchardist replied: 'When everyone else is panicking and pulling out their trees, that's the time to start planting'. Anyhow, here's today's chart of the Dow. The support level that I alluded to in the previous post lasted just one day and triggered a rally of just 62 points. Last night, the Dow landed on more substantial support at 10600. This triggered a more substantial rally. Whether that support now holds remains to be seen but the Aussie market and many large cap Aussie stocks have made strong reversal patterns on the daily chart. If 10600 does not hold on the Dow, the next support level is 9500.