. . . . The Counter-Shake Rotation Play. . . . .
Looking around a bit, many long-term investors and position traders are really getting nervous in the service. The day when the overall feeling is "I can't take it anymore. . .I just want out at any price!" . . . .is the day when The Shakeout is over and we can begin to rally. But until then, "Wash & Rinse" continues to be the phrase of the day.
The Brokerage Houses and Market Makers "shake out" the markets, a sector or a stock for the purpose of taking the shares out of "weak hands", so that they can distribute the shares to their larger customers who supposedly have "strong hands". This is not my definition. It is the accepted definition for the term. And implied in the definition is "capitulation by the Individual Investor."
In other words, by the very definition of a commonly used term on Wall Street, we are the victims of manipulation!
Of course we've known this for a long time and have adapted. What I am seeing currently is that shakes are rotating within sectors. For example, yesterday PHCM was soaring, while AETH was dumping. Today, AETH is up sharply in pre-market while PHCM is barely up.
I have been successfully making a counter play against the shake out, by trading among the sector! Hello?
When AMCC peaks and PMCS is down, I will trade them. . . playing the anomaly that the two tend to correct toward one another. When AMCC hits a bottom or weakens, PMCS will often begin to strengthen, I'll trade back into PMCS. This is generally a swing trade. . .with trades happening between about 4 hours and about 24 hours.
I've been trading between PPRO, ARBA and CMRC. Others include: CIEN and JDSU or GLW. . .HGSI and CRA. . .LPTH and FNSR. . . JNPR and FDRY. . . ISLD and AKAM. . . etc.
It gets a bit tricky, certainly not guaranteed and definitely causes more trading than usual. . .but so what else is new?
Rande Is |
