Monday, August 29, 2011

Change in market volatility indicates "Institutional Bullying"

So you decided to get into the stock market as kind of a hobby and thought those fancy "Trailing Stop Orders" were convenient because you could "Set them and forget them" eh?

Not so fast.

If you use Scottrade and watch the streaming quotes for the larger companies, you'll notice that buying and selling almost has a breathing pattern, such as with Citigroup [C], blocks of 5,000 shares appear to be continuously bought and sold, almost like someone waiting to play tennis, bouncing the tennis ball up in the air with their racket. These are Institutional investors who play with billions of dollars every day. If they stop breathing a stock, the price will fall.

When I started investing using Scottrade, I was using trailing stop orders to buy or sell stocks, but they were hitting wrong. It was after watching closely that I discovered big institutional investors were messing with price volatility by selling, then "buying to cover," large volumes of shares to shake-out standing trailing stop orders of smaller investors, so I no longer use any trade triggers, but I must be vigilant.

It feels like bullying.

Tuesday, August 23, 2011

QE3 boosts stocks.

The Federal Reserve may buy even more bad debt from Banks that loaned people money they couldn't afford to repay. This apparently is sending stocks higher in the hopes that companies with bad debt on their books will be restored to the point where they won't be afraid to expand their business, raise their employees salaries and hire more workers.

Banks will take the money and they will do with it what they did with QE1 and QE2 which is nothing at all. They will sit on the money. 

Friday, August 19, 2011

Recession and Recovery

What causes the recession? Huge corporations hoarding trillions of dollars of a currency. This takes money out of circulation.

How do we typically recover from a recession? The government borrows money from its tax payers and gives it to the corporations that couldn't manage their money.

What happens to the money from the government? It gets fed into the individuals or companies that continue to bleed cash into the hands of the companies that continue to hoard the cash.

Who are these companies? http://www.usatoday.com/money/companies/2010-07-28-cashcows28_ST_N.htm