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Hi Everyone: Once again we are learning that the powers that control the stock market can drive it up higher and for a longer period of time then we can anticipate. Although I don't think it will last as long as the Feb 9th through April 26th "low-volume, non-stop rally", it appears that they are going to drive the major stock averages and indices up another 2 or 3% at least. The encouraging language in the second paragraph below in Marty Chenard's report at Stocktiming.com today (and the chart that he uses to illustrate his points) translates this way; Marty writes the following:
"The red solid line shows you how much Selling has decreased by Institutions and the blue solid line shows how much Buying Institutions have done. The volume in decreased selling is a little over twice as much as the volume of increased buying. What does this tell you? It says that the market's rise since July 2nd, has been due more to a cessation in the amount of Institutional Selling rather than the amount of Institutional Buying. "By reducing the amount of their selling, it allowed the purchases of smaller investors to push the market higher. If they had a stronger conviction, the blue Buying line would have been taller than the red Selling line ... that is one of the elements of risks on an up move." As I wrote to my family and friends today, based on Marty's analysis, "The words where he summarizes are the encouraging part: In essence Marty Chenard is saying that the stock market is going up in a controlled manner because the MAJOR INSTITUTIONAL MARKET PLAYERS have greatly decreased their selling. Thus when smaller investors and funds try to participate in this controlled rally by buying, there buy orders drive the markets up higher because the BIG INVESTORs have stopped selling for the time being. As Marty writes,
"If they had a stronger conviction [that this rally was going to continue much longer and much higher] the blue Buying line would have been taller than the red Selling line [see Chart 1 below]....that is one of the elements of risks on an up move." In other words, there is downside risk to this kind of controlled, manipulated short-term market rally...This allows the SPECIALISTS and the large institutional players to short the market at higher and higher levels. This way when the market tanks and falls, they will be able to make more money [remember, the short-sellers borrow other people's stock when the stock prices are as high as possible. They immediately sell that borrowed stock and wait for the market to correct down sharply so they can buy back the stock they borrowed at much lower prices, returning the stock they borrowed and keeping the difference between the high price level they borrowed and sold at and the lower price level where they bought back the stock to "cover" or repay the stock they borrowed]. That is short-selling, and that is apparently what is happening. To insure that prices go higher from their recent lows of late June and early July, the big Institutions reduced the amount of stock selling so that the poor sucker's who are buyers right now actually help drive the stock prices and market averages (e.g. DJIA and the S&P 500) higher for awhile to give the big players a chance to short the market and thus make their big bucks when the market begins to fall. We don't know when, but at some point this summer the Big Institutions will begin to INCREASE THEIR SELLING, the media will suddenly be filled with scary, negative news, and the stock market will make yet another good size move downward, allowing those with bear ETFs to recoup their loses and hopefully make money as the stock market "free-fall" begins anew. I hope you find that helpful as the market for now moves higher. P.S. That's why I never try to second-guess these manipulated market rallies. I buy a little at a time on the way up and accelerate the amount of the buying of the bear ETFs when the market gets "extremely overbought"----which we should be seeing before too long. Hang in there, and remember, what goes up artificially comes down hard! Disclaimer: Nothing in this commentary should be construed as investment advice or guidance or any recommendation to buy or sell any financial instrument. It is not intended as investment advice or guidance, nor is it offered as such. It is solely the opinion of the writer, who is NOT an investment counselor/professional. All content of this commentary is solely an expression of his personal interests and is posted as free-of-charge commentary and is subject to error and change without notice. Please do your own due diligence before investing in ANYTHING. The presence of a link to a website does not indicate approval or endorsement of that website or any services, products or opinions that may be offered by them.
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