Why US Stock Market Just Can't Drop Further?

I didn't write anything for the past few days as i went for holiday but my god, i missed another great round of market sell off. Asia market hit the worst even their economy look perfectly fine and sound(except for Japan, of course) while UK's FTSE 100 only drop 5% although their GDP, the most important economy indicator, drop 0.5% quarterly.

However that's not the best story of the day. The most incredible story is that US market only drop less than 4% even before the US home sale report coming out. That's story is more amazing as S/P 500 was suspended from trading earlier today.

So i gonna do my best to answer the question that everybody ask (at least i receive a lot of email asking me this): Why US Stock Market just won't drop like other stock markets around the globe. Although Dow Jones and S/P 500 drop a lot this year, it is nothing compare to Hang Seng, Nikkei, FTSE, FSSTI, CAC, DAX or other stock markets.

1. Money

First of all, US are a lot wealthier than what we think they are. It's a 10 trillion dollar economy. Their economy is by far the most advance in the history of mankind. The pension fund in US hold trillions of dollar and average US citizen is wealthy even if US companies are not. A small portion of one pension fund is enough to make the market turn from red to green.

2.ADR

US stock market have the biggest amount of companies listing on it. A lot of them are American Depositary Receipt. Most of ADR companies are super blue chips in their respective country. That's why these ADR are well supported by funds from their country. Although all the ADR are not included in the Dow, Nasdaq or S/P500, they are giant in their industries and when they rebound, the whole industries will too.

3.Short Seller

Short seller. Short sellers are the single most important group for the US stock market. They are important not when they short sell but when they cover their position. Us stock market had it worst week in history when short selling was banned by government. It simply take away the buyer from the market as no short seller were they to take profit and cover their position(short sellers become buyer).

4.Irrational

US stock market has no correlation with the economy. Along the history of US economy, there were none indicator show any correlation between US economy and stock market. As we know market is irrational and unpredictable. Investor and trader buy and sell not based on current economy status by based on current emotion.

5.Government and Politics

First of all the US presidential election is just 2 weeks away. As we all know, prior to election stock market will surge as speculation aspect come into play. Either Obama or McCain comfirms that more government is needed to heal the economy and investor like it (although it won;t help US to recover). So government had intervene a lot previously and will intervene more in the future.

At the moment(3.05pm), Dow only drop 175 point(2.1%), Nasdaq drop 27 point (1.69%) and S/P 500 drop 19 point (2.1%). I won't be surprise at all if US market close today in the positive zone.