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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: yard_man who wrote (145930)1/24/2002 1:36:44 PM
From: GraceZ  Read Replies (1) of 436258
 
Even while traders move shares around and contribute most to the daily volume its the mutual funds that own and hold most of the shares. MUFUs are made up of a zillion little people and while some of them only look at their statements quarterly and have been soundly educated to hold for the long term and continue to invest through downturns, they are at a critical juncture here. Some people are looking at their accounts drop in assets cutting into their principle contributions and not just losing their gains. This is the point where little guys swear off the market. MUFUs will have no choice but to sell to meet redemptions if these little guys cut and run. Traders for the most part don't care about the direction, up or down they will play the market where ever it goes.

While we saw some strong block buying on Wednesday at the lows, yesterday's rally was marked by strong block selling as were the rallies last week. I haven't looked yet today at the flows but it I would fully expect the blocks to continue to be negative today. Its called distribution. Who's buying? Traders who don't intend to hold and little guys who will cut and run as soon as they realize they are left holding the bag. The sand has been run out underneath of this rally. When the funds exit it creates a situation where there is no foundation of holders underneath the marginal action that moves price. All it takes is someone shouting fire to get the downside rolling in this situation.
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