logo
  Join        Login             Stock Quote

The Smart Money Will Be Selling Into Wednesday's Rally

 January 22, 2013 08:58 PM


Everybody and their uncle is long this market right now, and equities have had a nice run with no pullbacks. The smart money will be selling into the rally to maximize profits by getting out when there is plenty of buying volume to eat up the sizable positions. It is the best time to sell because fund managers can liquidate large positions much easier without having to worry as much about creating complex Algos to maintain an overall high average price for the exiting position.

Bag-Holders

The S&P will be up around 5% just in January alone, not to mention the run-up from about this time last earning`s cycle when the benchmarks all sold off during the second half of earning for the third quarter. Tomorrow is close enough as good as it gets for a while, and traders will try to push up the S&P to 1500 if they can, but the smart money has such large positions that they will start selling into any rally tomorrow, watch for redistribution going on in your favorite stock. The smart money will be handing off to the bag holders looking to get in at the last moment. The smart money never chases, they always wait for a pullback to get into a trending market.

[Related -Landstar System, Inc. (LSTR): Trucking 26.77% Higher Says BB&T Capital]

Further Reading - The Japanese Yen Trade Is Exporting Inflation To China

[Related -Sprint Corporation (S) Q1 Earnings Preview: Trending Towards Danger?]

Getting a Good Price

The reason why the large funds don`t wait until an exact top is put in is because once everybody realizes the gig is over, and the selling commences, everybody runs for the exits at the same time trying to protect profits, and buying puts to protect portfolios, which just makes the selloff worse because the VIX spikes even more, and forget about getting a good price for your exit. This is why you sell into rallies to maximize profits on the exit.

Buying Exhaustion & Market Timing

And when everyone is this bullish, and most of wall street cannot beat the S&P 500, the sheep get slaughtered when the buying reaches an exhaustion phase, i.e., there is no one "dumber investor" than you who buys after you, thus enabling you to have a nice profit. Making money on Wall Street is all about market timing, what do you think the market is going to have a 12x5% for a 60% annual return in 2013? This is why the smart money and those fund managers who outperform the S&P 500, perfect the art of timing the market, and selling into bullish rallies to maximize gains.

Further Reading - High Margin Requirements Are Killing The Silver Market

Always enter Trending Markets on a Pullback

They will be back after we have our first pullback in 2013, but they will be market timing the entire year with strategic buys and sells, this is how you beat the S&P 500, and attract higher assets under management. So be smart like the pros, and sell into the rally tomorrow, so that you aren`t waiting for a huge announcement like the rest of the sheep on Wall Street that it is time to sell. As when everybody realizes it is time to sell it is too late to maximize gains, equities will gap down 30 S&P handles, and your entire holdings gap down as well before the market opens.

Be Dumb like Apple Investors – Wait for an engraved invitation to sell

The other option of course is just to stay invested like Apple investors did at $700 a share, remember how bullish all the talking heads were on all the shows. There wasn`t one analyst that said it is time to sell after apple reached a larger market cap than 3 top 10 fortune blue chip powerhouses of industry. Not one pundit, critic, trader on Fast Money, everyone was so bullish when Apple was at $700 a share; it was guaranteed to go to $800, $900 and a $1,000. Just a thought to remember, when everybody else is so bullish, who is left to buy from you?

Most Wall Street pundits just follow the crowd, so when markets are up, everyone talks bullish. But after three days of selling, these same pundits will be telling you it is the end of the world, and the top is in for the year, and all the same bearish clichés. Always look for good entry and exit points, never chase, and believe in market timing. It is one of the best ways to become a smart investor. So watch tomorrow for distribution going on in your favorite equities, as many will be taking profits by selling into the rally as discreetly as possible, and so should you!

iOnTheMarket Premium
Advertisement

Advertisement


Post Comment -- Login is required to post message
Name:  
Alert for new comments:
Your email:
Your Website:
Title:
Comments:
 

rss feed

Latest Stories

article imageHealth Net, Inc. (HNT): Potential to Be Huge Winners Says Bank of America

As of this keystroke, Health Net, Inc. (NYSE: HNT) shares are up around 4% on the day. The managed health read on...

article imageHomeAway, Inc. (AWAY) Q2 Earnings Preview: Top and Bottom Line Bullish Surprise?

HomeAway, Inc. (NASDAQ:AWAY) will report its financial results for the second quarter ended June 30, 2014 read on...

article imageAmazon.com, Inc. (AMZN) Q2 Earnings Preview: Missing on the Top and Bottom Lines, Again?

Amazon.com, Inc. (NASDAQ:AMZN) will release its second quarter financial results after market close on read on...

article imageFord Motor Company (F) Q2 Earnings Preview: Light on the Top Line?

Ford Motor Company (NYSE:F) will release its preliminary second quarter 2014 results at 6:30 a.m. EDT read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center

Related Articles:

Heading into July FOMC meeting
More Articles on: Trading Education



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.