Along For The Ride

As retail investors, we are pretty much along for the ride as far as the stock market goes.  That purchase you make today of 500 shares of xyz company doens’t do squat to move the big numbers.  The institutional and commercial accounts who are moving millions of shares daily are the ones moving the needle.

At The Big Picture, Bill King puts up an interesting column today about how the end of this month might be “gamed” and could be good for a short term pickup in stocks.

Between now and the end of June, traders, wise guys and PMs will try to manipulate stocks higher to game Q2 performance – especially with May being the worst month for stocks in decades.

This week is option and futures expiration. Normally there is a triple-digit DJIA rally for expiration week; and Bernanke pours liquidity into the system for expiration week.

If stocks would have declined last week, this week would have been a layup for a rally – as long as no new negative news surfaced. Ergo, the expiration rally this week might be more tepid than usual.

Another bullish factor for some stocks is the June 25 Russell rebalancing. So, barring ugly news or developments, the bias for the next few weeks should be to the upside for stocks.

Interesting stuff.  I recommend you read the whole thing.  Always remember that for investors on our level, we are along for the ride.

2 thoughts on “Along For The Ride”

  1. Agreed that we are absolutely along for the ride. Trying to minimize this a tiny bit by the fact that almost 50% of the stocks I recommend are ADR’s from outside the US but as you know both are very correlated, except now the Euro is hurting those stocks (a lot were UK denominated which performed differently).

    Also a lot of the total indexes were due to the impact of BP since it has a large market weight.

    Not mentioned here was the fact that the publicly traded stocks on exchange are only a tip of the iceberg relative to the “dark pools” that all the big traders use to move big blocks. The average trader isn’t even allowed to stick their toe in those pools.


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