From The Pragmatic Capitalist:

This is a question that confounds those on the sidelines and aggravates the bears to no end. Many attribute it to some sort of bank or government engineered conspiracy theory. Others say it is simply performance chasing by large money managers.

Personally, I find the answer in the psychological.

When you break market transactions down to their simplest point it really all comes down to psychology. The transaction price point occurs at an agreed upon price where one party succumbs to the demands of the other (to oversimplify things).

In other words, one party has a greater need to achieve a certain price on the buy side or sell side. This is all due to psychology.

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