The Smart Money Will Be Selling into Wednesday's Rally

EconMatters's picture


By EconMatters

Not a Bear in Sight

Everybody and their uncle is long this market right now, and equities have had a nice run with no pullbacks. The smart money will be selling into the rally to maximize profits by getting out when there is plenty of buying volume to eat up the sizable positions. It is the best time to sell because fund managers can liquidate large positions much easier without having to worry as much about creating complex Algos to maintain an overall high average price for the exiting position.




The S&P will be up around 5% just in January alone, not to mention the run-up from about this time last earning`s cycle when the benchmarks all sold off during the second half of earning for the third quarter. Tomorrow is close enough as good as it gets for a while, and traders will try to push up the S&P to 1500 if they can, but the smart money has such large positions that they will start selling into any rally tomorrow, watch for redistribution going on in your favorite stock. The smart money will be handing off to the bag holders looking to get in at the last moment. The smart money never chases, they always wait for a pullback to get into a trending market.


Further Reading - The Japanese Yen Trade Is Exporting Inflation To China



Getting a Good Price 

The reason why the large funds don`t wait until an exact top is put in is because once everybody realizes the gig is over, and the selling commences, everybody runs for the exits at the same time trying to protect profits, and buying puts to protect portfolios, which just makes the selloff worse because the VIX spikes even more, and forget about getting a good price for your exit. This is why you sell into rallies to maximize profits on the exit.



Buying Exhaustion & Market Timing

And when everyone is this bullish, and most of wall street cannot beat the S&P 500, the sheep get slaughtered when the buying reaches an exhaustion phase, i.e., there is no one “dumber investor” than you who buys after you, thus enabling you to have a nice profit. Making money on Wall Street is all about market timing, what do you think the market is going to have a 12x5% for a 60% annual return in 2013? This is why the smart money and those fund managers who outperform the S&P 500, perfect the art of timing the market, and selling into bullish rallies to maximize gains.


Always enter Trending Markets on a Pullback 

They will be back after we have our first pullback in 2013, but they will be market timing the entire year with strategic buys and sells, this is how you beat the S&P 500, and attract higher assets under management. So be smart like the pros, and sell into the rally tomorrow, so that you aren`t waiting for a huge announcement like the rest of the sheep on Wall Street that it is time to sell. As when everybody realizes it is time to sell it is too late to maximize gains, equities will gap down 30 S&P handles, and your entire holdings gap down as well before the market opens.

Be Dumb like Apple Investors – Wait for an engraved invitation to sell

The other option of course is just to stay invested like Apple investors did at $700 a share, remember how bullish all the talking heads were on all the shows. There wasn`t one analyst that said it is time to sell after apple reached a larger market cap than 3 top 10 fortune blue chip powerhouses of industry. Not one pundit, critic, trader on Fast Money, everyone was so bullish when Apple was at $700 a share; it was guaranteed to go to $800, $900 and a $1,000. Just a thought to remember, when everybody else is so bullish, who is left to buy from you?


Most Wall Street pundits just follow the crowd, so when markets are up, everyone talks bullish. But after three days of selling, these same pundits will be telling you it is the end of the world, and the top is in for the year, and all the same bearish clichés. Always look for good entry and exit points, never chase, and believe in market timing. It is one of the best ways to become a smart investor. So watch tomorrow for distribution going on in your favorite equities, as many will be taking profits by selling into the rally as discreetly as possible, and so should you!



Further Reading - Apple Price Target: $50 Stock by 2016

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Jeelan's picture

The only thing that matters to the markets is easy money and easy credit.  If you can't even get that right, change your ID and remove any reference to econ.  The number 18 will be in front of the DOW or the S&P before this takes a investigation specialists

rsnoble's picture

As I mentioned in another post Goog sold off for days into earnings to a good support level so a pop was a good % possibility.  AAPL is the same 'unless' it rises all day in anticipation in which I don't like that.  I'm still convinced all this idiotic horseshit is going to end in full scale nuclear war our entire civilization is in fantasyland.  Well except for the ethiopians. LOL.

lemarche's picture


MFLTucson's picture

This whole idea of charts with the Federal Reserve printing higher prices makes no sense at all.

dark pools of soros's picture

High tide raises all ships

Tidal wave raises all ships then crashes them violently

Tsunami Bernake

Quinvarius's picture

Calling people who called this right "dumb" is not going to change anything or stop the rally.  I said it when Kaminsky screamed sell.  I said it when the idiot who can only count to 13 said sell.  I am saying it to you.  The only thing that matters to the markets is easy money and easy credit.  If you can't even get that right, change your ID and remove any reference to "econ".  The number 18 will be in front of the DOW or the S&P before this takes a break.

new game's picture

TD-beg of u; please post this crap at yahoo so the average iq visit doesn't wane...

new game's picture

oh i learnt so muck i am now a rocket man.

tanks a mil mon...

ReeferMac's picture

Excellent article my good man. Thank YOU for sharing with us.

Never One Roach's picture

I will definitely be out of more of this c-r-a-p my house falls in value at least I take some profit  in what they call...'the stock market."

WTFUD's picture

The cracks in the Ponzi have become Deep Landfill Events.

Take TESCO su(e)per market chain maybe the biggest in UK. Caught pants down a few weeks ago ( in the spirit of discounts and new year festive cheer ) flogging HORSEMEAT (25%) as 100% beef burgers to their valued customers.
What the fuck else is out there?

Am confident the powers that be would have the corner shop owner in ball&chains before you could scream spaghetti bologneise.

Seriously awaiting a detailed gubmint health statement on who where ( not why; profit ) and for how long?

shovelhead's picture

Wait until they report that the 'horsemeat' was delivered to Tesco in unmarked NHS vans.

Burgers just like Grannie used to make...and still does.

silverdragon's picture

I thought smart money purchased physical silver and gold and took delivery!

Hobie's picture

Well played silverdragon. +1

uncle_vito's picture

Why not sell into Thurs Rally or Fridays?   How about Feb's Rally?

Freddie's picture

LOL!  Or March, April, May, June, July, August....

Obam is Mugabe.  Zimbabwe's stock market went up some crazy percenatge like 40,000%.  The money became worthless.  Just like Mugabe and O.

ReactionToClosedMinds's picture

David Tepper and Howard Lindzon  ... can't be long enough equities.  Per Tepper recently .... USA on the verge of greatness ... another late 1990s re-run (ugh).

I'd be scared to think about even looking bearish versus actually positioning.   Yet Tepper 'admits' he is partial to liquidity after the Russia debt blow. 

Hmmmmm..... and why would you be so keen on liqiuidity David if Amerika is now poised for greatness.  Never mind....small minds are not supposed to understand the brilliance of Goldman Sachs or Appaloosa

DeadFred's picture

It seems that Apple doesn't like Dojis and it made another.

Assetman's picture

Yep.  APPL has been a glorified Doji-rama the past few weeks.