I don’t know what it is but the market just isn’t acting right - to me. There was the Fed today, and funds going out of business into the end of the month, and Russell re-balancing. There are some strange forces going on here with price. My breadth stats were terrible again today. It looks to me like another distribution day.
I’m looking to buy some aggressive (QQQQ) calls on a down move this week. Research in Motion (RIMM) had bad news so maybe that is finally moving as I expected. The downside of this is that if we don’t get a bounce here we are probably headed for a retest of the March low.
Post Modified: July 2nd, 2008 at 11:53 pm
Tags: Distribution Day · Market Internals · QQQQ · RIMM3 Comments
3 responses so far ↓
Andy,
last year there was a lot of talk about the downtick rule being changed (in July), and also hedge fund redemptions aftecting the markets overall. Hedge funds have opened up to a lot more investors in teh last couple of years, could that be ‘throwing’ off the cycles (i.e. hedge funds being much bigger than what they used to be, affecting the market more than they used to?)
Hedge Funds’ redemptions happen on quarter ends. Clients have to give a 30 day notice or pay an early redemption fee. My guess is a lot of clients asked for their money back this month. So there is a huge liquidation going on in the market.
The Dow already tested March lows and now it’s testing the January lows.