The Type of Selling I Hate

This morning the Dow Jones Industrial Average is in free fall and in an information vacuum.  This is the type of selling I hate.  Why?  Because as I read the various quotes from traders that are in the business press they are all saying that the selling is triggered by a lack of good news and a preponderance of bad news.

However, there is no new bad news today.  So why didn’t the folks who are selling today, sell yesterday, when there was actually bad news (increased jobless claims)?  This type of selling activity is something that plagues the markets pretty consistently.

I generally attribute this type of selling to hedge fund activity where some important technical trigger was reached and the machines that execute trades for these gigantically levered money managers are now trading wantonly.  This is the type of selling (and buying) I hate.

The selling is represented in the financial press as “the market,” when, in fact, it may just be half a dozen hedge funds at most.  Ugh!

But importantly, this type of selling or buying – on technical “news” rather than actual news – often times indicates a bottom has been reached.  However, if you were considering plunking down some cash into the stock markets, I encourage you to wait until the U.S. debt ceiling crisis and the Greek debt crisis are both resolved.  These are some of the pressures overhanging the markets and importantly, they have calendar-based deadlines.  So there will be greater clarity soon.

Jason