ETF Trading; The Crowd Is Always On The Wrong Side Of The Fence


ETF Trading 101; Don’t Follow The Crowd

The article below highlights how the masses are always on the wrong side of the market. They allow fear and paranoia to govern their actions. When an action is controlled by emotion the outcome is always negative.  Hence the solution is to sit down and look at things around calmly. You need to understand we are in a new paradigm; a paradigm where the main driving forces are hot money and until fiat comes to an end, all corrections ranging from mild to wild, should be viewed as opportunities.

Bond rates are almost negative and instead of putting some of this money to work in the markets, the crowd prefers to hold onto it and take a neutral position.

ETF Trading 101:

When Investors holding more cash, it indicates that the Crowd is nervous and its time to jump in and buy.

And with investors large and small grappling with an uncertain future, hedge funds are quickly building up cash that they can redeploy to buy stocks, bonds, commodities and currencies. The funds have raced to sell off positions in securities bought with borrowed money, a process called “de-grossing” on Wall Street. Wednesday was the biggest one-day run of such unwinding since 2010, according to a report by Morgan Stanley on ThursdayNYTimes

Inflows to cash-like assets totalled a record $137 billion through the five days ended March 11, Bloomberg reported Friday, citing Bank of America and EPFR Global data. An all-time high $14 billion was channelled into government bonds, while investors dumped $3 billion into gold.

While capital is shifting toward safe havens and stable assets amid sharp volatility, investors are cashing out of various grades of debt and equities. Investment-grade, high-yield, and emerging market bonds saw their biggest collective outflow in history as investors pulled more than $34 billion from the asset class. The financial sector saw $3.3 billion withdrawn, marking another record during the chaotic five-day period. Business Insider

Hope is the fool’s weapon of choice

Hope is for fools that have plenty of time on their hands with an inordinate desire for pain, at least as far as investing in the markets go. We do not mean to be harsh, but the stock market is a jungle, only those that adapt live, the rest are cannon fodder.  Thus hoping for change, while doing exactly the same thing you did yesterday amounts to insanity. Central bankers are hell-bent on destroying the value of the dollar and holding cash is not the best way to deal with this threat.

This is why this Bull Market will run much higher than anyone expects; the longer these people worry and ponder over useless facts, the higher this market will run. When these guys finally jump in, the final feeding frenzy stage will be close at hand; after that, we can expect the markets to crash.

Stock Market Outlook Market Update March 2020

Insiders have been using this massive pullback to purchase shares, and one way to measure the intensity of their buying is to check the sell to buy ratio. Any reading  2.00 is considered normal, and below 0.90 is considered as exceptionally bullish. So what do you think the current ratio is; well, it’s at a mind-numbing 0.35, which means these guys are backing up the truck and purchasing shares.

So what are the readings today? Based on very heavy transaction volume, Vickers’ benchmark NYSE/ASE One-Week Sell/Buy Ratio is 0.33, and the Total one-week reading is 0.35. Insiders are not just buying shares, they are devouring shares. Insiders behaved in a similar fashion in late-December 2018, after stocks crashed on Christmas Eve; in early 2016, when stocks also corrected; and in late 2008/early 2009, at the depths of the Great Recession correction. Those were spectacular times to buy stocks. Insiders seem to be telling us that today offers a similar opportunity.

When the panic subsides, it will create a feeding frenzy of the likes we have never seen before.  When you combine zero rates, two trillion dollar injection by the Feds and several more billion-dollar packages designed to stimulate the economy, the result is going to be a market melting upwards. The markets will be driven to heights that are unimaginable by today’s standards. Zero rates are also going to force a large portion of individuals on a fixed income to speculate, and these guys have a lot of cash sitting on the sidelines.

Random Suggestions

If you seek freedom, the 1st task is to attain financial freedom so that you can break free the clutches of the top players who seek to enslave you. They want you to run in a circle like a hamster that runs on a spinning wheel; the hamster thinks the faster it runs the further it will go, but sadly it is going nowhere.

We teach how to use Mass psychology to your advantage, how to view disasters as opportunities and how not to let the media manipulate you and direct you towards actions that could be detrimental to your overall well-being. Subscribe to our free newsletter to keep abreast of the latest developments. Change begins now and not tomorrow, for tomorrow never comes. Understand that nothing will change if you don’t alter your perspective and change your mindset. If you cling to the mass mindset, the top players will continue to fleece you; the choice is yours; resist and break free or sit down and do nothing. While we are at, never forget, investing starts with effective portfolio management; without this, you are shooting darts in the dark.

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