The Death Of Momo

The story today is the collapse of the momentum stocks as Joe Sixpack runs for his life. The 10-stock momentum portfolio I set up is down 3.3% as I write today and 6% (ok, 5.94%, I exaggerate) since it was created on 8/15. Meantime, the Dow is down 44 and the S&P is down 9 and change, 0.5% or less.

No doubt in my mind that those stocks have been heavily shorted by the pros at the same time as they have been pimped to retail and the pros have decided it is time to collect.

So they short more, and then when the retail traders are scared or getting margin calls (or both) they cover their shorts by buying the stock from the weak hands who just bought them at much higher prices.

Post a comment or leave a trackback: Trackback URL.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: