Matt Trivisonno’s Blog

It might sound crazy, but the big institutions were supporting the market again today. Keep in mind that they don’t want to buy here, and only do so to prevent a huge plunge so that they can unload as much stock as possible. Their powers are limited. Their goal is to dump stock, so there is only so much strategic buying that they can do to prop things up before they become net buyers.

If you think I’m nuts, take a look at an hourly chart of the QQQQ for today. You will see the price suspiciously hovering around $47.75 for four hours. That’s them. The contrived action was so flat and boring that I was about to nod off when ace banking analyst Meredith Whitney came on CNBC

My eyes lit up because Whitney doesn’t pull any punches. What time did she come on? Just look at a minute chart of the QQQQ or just about any other chart, and you will see her footprints. At around 3:19pm, as the big dogs were supporting the market, Whitney took out a rolled-up newspaper and gave them a serious beating. The big dogs ran off with their tails between their legs and the market plunged to the close.

What did she say? How should I know!? Whitney is way smarter than me, talks too fast, and uses too much jargon, so if you can understand everything she says, you can consider yourself a banking expert. But enough of what she said got through to me, and obviously to other traders too. In short, she said that there is plenty more downside for financial stocks. How much? Even she can’t tell because there is no way of seeing through their bullshit accounting.

Will the big dogs be back to try and prop up the market again tomorrow? That depends on how much more stock they have to unload. Judging by the way they bolted this afternoon in the face of Hurricane Meredith, I think they are lugging inventory. Maybe they will try; maybe the will just join the sellers. In any case, their job is much more difficult now, and it may not be possible without some good news.

It will be much harder to suck in traders here. For example, any trader who looked at the QQQQ chart this afternoon, and thought: “support is holding, I can get long” got burned big time. They won’t be so easily fooled next time.

(Note: Kudos to CNBC and Maria Bartiromo for letting Whitney give her analysis. It was pretty much predictable what she would say and what would happen. So, instead of BubbleVision, critics will be forced to call CNBC PoppingTheBubbleVision today.)

Bookmark It

Hide Sites

This entry was posted on Wednesday, June 11th, 2008 at 4:21 pm and is filed under Investing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.