By InTheMoneyStocks.com on March 9th, 2010 9:28pm Eastern Time
To truly understand the markets, one must think the opposite of the average investor or trader. When it comes to the total volume in the market, more than 90% is generally from institutions. When it comes to the total number of market participants, 95% of them are the average investors or traders. This is a peculiar disparity but totally understandable. This is also how many of the institutions make their money. In other words, by moving the markets in ways pull money from the average investor or trader or going the opposite of what the masses believe.
There was a fantastic example of this in the markets on Tuesday, March 9th, 2010. The SPDR S&P 500 ETF (NYSE:SPY) was slowly inching higher all morning and early afternoon towards the master double top level from mid January. This exact price on the SPY was $115.14. The average investor and trader, all 95% or more of them were looking at that level as being major resistance and looking to sell their positions there and even possibly go short the market at that price.
As I have discussed earlier in the article, if everyone expects it to happen, it will not happen as institutions attempt to take money not give it to the smaller trader/investor. Sure enough, the SPY tagged $114.99 and reversed, selling hard as institutions dumped. This could be seen by as volume surged. Why was this significant? Because it did not allow the amateur trader or investor to sell their longs and take profits and did not let them short the market. Truly masterful! Every average trader expected the $115.14 to be tagged and because of that, it was destined to not hit.
Whether it hits tomorrow or in the next week, we will have to see. I have expressed my expert views to my premium members of the Research Center and Intra Day Stock Chat but one thing remains certain, if the markets do move up into $115.14, and all the amateurs short, you can be sure institutions will push the market higher to stop them out.
This is pure and simple market psychology or essentially big money controlling little money. Learn the game and never again be caught on the wrong side of the trade.
A few other significant notes on the market. The iPath S&P 500 VIX Short Term F (NYSE:VXX) which tracks the S&P 500 VIX Short-Term Futures, saw a huge block trade of 3 million on March 8th, 2010 at approximately 3:30pm ET. This appeared to be a large buy. The VXX shot up into the close, jumping well off the lows. Someone big obviously betting the market was coming into a wild ride period. The VXX was higher today.
In addition, Goldman Sachs Group, Inc. (NYSE:GS) on Tuesday, March 9th, 2010 saw a huge block trade go off for 1.5 million shares on what appeared to be the sell side. Just a little while after this institutional monstrous order went through, the markets dropped sharply and Goldman Sachs was slammed to the negative side. Another key signal? Quite likely.
Where does that leave us in the coming days? What other interesting things does this tell us about the markets and stocks? Where is the place to put your money? Join the Research Center to find out!
Gareth Soloway
Chief Market Strategist
InTheMoneyStocks.com
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