From Thestreet.com
Brother Can You Spare $50K?
As you may have already heard, margin activity climbed 8.9%, to a
record $265.2 billion in February, following a 6.5% rise in January.
Charles Biderman, publisher of TrimTabs.com, noted the
Nasdaq's move down to begin the week coincided with a decision
by Datek Online Brokerage to raise margin requirements on
many "highfliers" or make them margin-restricted (verboten)
altogether.
A Datek spokesman confirmed the firm "toughened" margin
requirements on 78 stocks this week, as reported by The Wall
Street Journal. He declined to provide a list of the stocks affected.
Biderman said other online brokers have enacted similar changes in
recent days, although sources at TD Waterhouse and National
Discount Brokerages, for example, denied having done so.
Charles Schwab did not respond to a request for similar
comment.
Still, the Federal Reserve's tactic of "targeting the highfliers by
jawboning" the NYSE and National Association of Securities
Dealers regarding margins is working, Biderman argued.
At the same time, there's been more than $18 billion in cash
takeovers of public companies in the past two weeks and $16
billion in stock buybacks, he said.
So while momentum favorites are suffering from liquidity problems,
"there's money flowing into the checking accounts of market pros"
because of the buybacks and leveraged buyouts. That money is
finding its way into Dow and S&P-type stocks and then, because
of "herd followers," everybody is now on the "new bandwagon,"
Biderman continued.
In other words -- momentum traders go where the momentum is
and aren't necessarily wed to tech. |
