Very Important Suggestion
I have a suggestion for folks, both the short-play traders and the long term investors: your maximum gains can be achieved by investing your time in study, not trading, for the next week. And here's why.
-- the final 5 trading days of a month and the first two of the following month is typically a high volume time because this is when 401K money, direct deposit earnings, etc. flows into funds which then must invest the windfall. That's a given.
-- the institutional funds are waiting for a clear bottom to make their buys. That's a probable.
-- that's enough to justify my call to study next week. But if you add my theory, it only increases the importance of that study.
My Theory
After several down days, when the institutions jumped back in Wednesday, the first thing they wanted to do was raise the market. So they bought the leaders all afternoon with the fresh cash and up went the market.
Thursday, feeling the bottom had been defined and the buying signalled an uptrend, traders bought across the board the stocks they thought were due for a rebound. Didn't you see lots of green on your charts/tickers yesterday morning?
Then the institutions sold. They sold some out of leaders at the top (if they viewed fresh weaknesses there, like in QCOM)and in the middle, raising cash by selling into the blizzard of buys. If this part is correct, that neat trick netted them millions.
Now let's suppose they intend to invest that cash, and fresh cash rolling in on the first from retirees/govt employees/etc. This means they are looking for a bottom between now and next Thursday, to make those buys by Friday, at latest.
Traders are looking for every edge, every minute, but money managers know patience pays off better. They wait.
We should wait.... and study.
As we move off the bottom, watch. Watch who's buying and what they're buying. After every succeeding 'up' day next week, report which funds are buying and what they are buying.
(Here I ask a question: we all can locate sites that list the top ten gainers and top ten losers each day... does anyone know of a list of the top 25 or 50 or 100? If so, this can help reduce the study time; please let us know!)
After every up day, buy the Wall St. Journal. Pore over every last dang listing on NASDAQ and jot down what rose and what fell. Tally them from the first up day to the end of next week, and tally the volume, too.
At the end of next week, you'll have a blueprint, which should display the following:
-- the biggest gainers on great volume will show up as the 'new leaders'... this is where the money managers are betting the greatest gains are available in the most solid companies.
-- the greatest losers on reasonable volume will show up as their bets against a company's future.
--the results won't be perfect because a few will go up or down on fresh news, but generally, from this effort, we can put together a pretty good list of the top 100 gainers and top 100 losers.
And if this is where the institutions are betting, they'll likely continue buying what they perceive to be the best at the end of June, just before earnings reports, so they can detail their smart holdings to shareholders. Some may keep betting that way for several months.
We can benefit greatly by knowing where those bazillions are pushing up the prices most. Some of the best gains of at least this summer can be made by knowing this.
Sounds like a huge task to study what? 5000 companies? This is where teamwork comes in. If 13 people take 2 letters of the alphabet, and study only the symbols beginning with those 2 letters (such as, I take companies whose symbols begin with A or B, you take the Cs and Ds, etc), and each person reports the top 25 gainers and top 25 losers from their section..... well then one person could take those 13 list pairs, containing 325 gainers and 325 losers, and narrow them down to the 100 best ups and 100 worst downs.
Don't you think that would be killer info to have?
And here's another reason this makes sense. Take a look at endMay-allJune from this 1 year chart:
bigcharts.com
The first week after Memorial Day doesn't move enough to worry about missing a sustained rally. It's been a fairly flat week for the past few years, from what my research shows. And retesting the low is likely to happen near mid-June, too, providing a perfect buy time again.
Which Begs This Question
Among the common names that post here and at Stan's, are there another 12 folks who will undertake this with me?
I betcha spending this flat week studying the institutional money flows will pay off bigtime for traders and investors alike.
Sure, there are smaller caps to play and sure, many others will have great pops at different points. But the winners and losers here will provide clear and unambiguous insight into the likely winners and losers for 2 or 3 months, at least.
So who's willing to help? |
