Great post, Jenna.
From a trader's standpoint, the thing to do with the analysts is just the same thing we do with the market in general: go with the flow. I welcome the volatility they create, because I can benefit from it far more than I do from a stable market. The analysts and their market manipulation are just another part of the game. And so long as the effects of their manipulation remain predictable, all the better for us. The keys, in my mind, are to be extremely nimble and to avoid fighting the trend.
I feel pretty certain that money is going to flood back into the tech and Net sectors sometime soon. Maybe not tomorrow or this week or even this month -- but before too long, the game will pick up again. I have my eyes on three signs:
(1) Late last week, institutional buying in the Nets and certain tech companies picked up considerably. Look at the institutional messages for YHOO or SEG last Friday, and you'll see the emerging trend in a rather extreme form. This was in marked contrast to the activity at the beginning of the week, which was much more ominous for the sector.
thomsoninvest.net
(2) The AMG data on money flows last week was stunning: stock mutual funds brought in $124 million, which is a miniscule figure, and money-market funds brought in a whopping $6.35 billion. Taxable bond funds attracted $515 million, and municipal bond funds drew $78 million. Overall, $7.067 billion came into the fund market, and of that 90 percent is now sitting in cash. That's unbelievable in a week that saw the Dow close above 11,000 for the first time and that saw an ongoing resurgence of several beaten-down sectors. What this tells me is that nobody is excited about the cyclicals or about other sectors in the old economy. In my view, that cash is sitting there waiting for the new economy to bottom and kick back into gear.
amgdata.com
(3) On this same subject of money flows, just reading around the SI trading threads gives a general impression that a lot of people are sitting principally in cash (or in highly liquid positions in other sectors) or are riding short positions. Again, I see this marking a waiting game, as we look for a bottom in the new economy.
I'm watching very closely for a reversal, but will not commit much money until an upward trend is clear. Making money in the market isn't about being a hero; it's about looking for places to put your money where you have overwhelming odds in your favor. |
