Past week recap: A rally already? What completely changed institutional investor’s minds from just days ago? Makes one wonder which behavior is the real thing – the very sudden “fears of inflation” sell-off or last week’s “on second thought, everything’s really ok” rally? The cynic in me (developed from having observed countless instances of market manipulation in stock charts over the years) suspects the recent rapid decline may have been politically-driven, broker-induced, and made worse by the triggering of sell orders in low-volatility ETFs. Why? Seems very coincidental that the massive sell off occurred just prior to Trump’s State of the Union address, possibly orchestrated by political opponents to embarrass him and strip his ability to take credit for the market rally (which began the day after the Presidential election). Now that the event is over, the market is just as suddenly back to normal – with pundits having no substantive explanation for why stocks recovered so quickly (did those “inflation fears” suddenly evaporate?).
Too little time has elapsed to determine which trading behavior represents actual prevailing institutional sentiment and which represents the manipulation. Was the “correction” artificially induced, followed by authentic institutional optimism, or was last week’s uptrend a contrived “sucker rally” ahead of an authentic market slump set to resume? Makes it hard even for analytics to discern the truth.
As a result, we are getting “churned” somewhat – induced into trades per analytics that reverse in short order, resulting over-trading and trade losses. Many of our positions are either small gains at best or small losses, being so recent that not enough time has elapsed for substantive price moves – and not expecting more of our positions to provide large gains until broker-driven market manipulation ceases and gives way to authentic trading patterns forming a sustained trend one way or the other. Certainly a frustrating market right now.
Highlights: 4 new weekly highs in long positions. 6 stocks with double-digit long gains:
EVTC +16%
LQDT +24%
URBN +64%
BXC +75%
FMSA +12%
PES +10%
4 new weekly lows among short positions. 2 stocks with double-digit short gains:
HTZ +12%
GLMD +41%