t.m.,
you're getting yourself all in a lather, now. but not to fret, i do the same frequently. among the many things that seem to be presently galling you is this talk of 'smart money.' i'll try to explain the idea of it a little.
initially the idea came from barron's, and one fellow who liked it has followed it since and posts it. it is a cumulative index gathered from only two time periods each day, and it is based on the djia. the first 30' of each trading day is called the dumb money time; it is buying based on emotions: analyst moves, maria's breathless utterances, cnbc pumping, all the pompom noise, and so retail buyers rush in not wanting to miss the get-rich action that is unfolding before their very eyes. (it's not mentioned, but i think the buy-at-mkt.-on-the-open orders based on post-close analytical hype from the closing action of the previous day adds to this.) this noise, the early buying, is subtracted and then the buying action of the last hour of trading is added and a cumulative total results. it is felt that the last hour should be free of news, of emotional content, and it will include block trades that are set to execute at the close, institutional action; this buying is considered more reasoned. this index is not immediate in its impact; it can lead the mkt. action by 75 to 85 days.
i think its value lies in its power to confirm, or not, mkt. trends. an example i would use is the deep mistrust i have of stocks moving up against a falling obv: sand beneath your feet. the terms smart and dumb are tossed lightly about in describing daily action, and perhaps this nullifys its power some, but still, i believe the general idea, the different patterns of buying, does hold water. as with any indicator, it is only one of many you'd like to have on your side.
someone, que, i think, mentioned techs crashing and oils being a home for capital. that may be too facile. some techs are finding their bottoms and becoming "investments", if you will.
today it was software's turn to get notched down. what high multiple stock, or group, gets slammed next? we should all be expecting them, these collapses, but i don't think we should count out the stocks that are gradually flattening out and becoming ever more limited on the downside. the 2 you mention, amcc and ibm, give me the heebie jeebies. they await the steamroller of fair-value. it isn't just declining revenues they face, it is also all the lies told in the past to boost the bottom line, like options-as-pay, and underfunded pension plans, and buybax on borrow bucks. many wrinkles to iron out.
all in all, today was very good to me, even with giving a little back at the close. i am loving the way nok is working out. the good news from europe, which is a week old, is just now getting here. all hail, the information age!
don |
