Well, we saw more wild action in the stock market yesterday. The DOW futures fell 500 points overnight Wednesday, but crawled into the green. There was some buying on the open and then things fell apart and enough selling came in to cause the ARKK ETF and the Russell 2000 to make new closing lows for the year. Market volatility is simply going to continue.
INTC had earnings and fell 6%. That is one reason the market fell. TSLA also had earnings and dumped 11.53%. That didn’t deter small traders and individual investors from trying to buy it though. Check out this Fidelity data of the number of buy and sell trades done Thursday, with top order flow ranked.
More buy than sell orders came through Fidelity by a 42:13 margin for TSLA and down the list there were more buys than sells. Despite the technically broken market and selling yesterday there is no sign of panic among the masses at all. In fact they are aggressively trying to pick bottoms in broken stocks.
Here is the chart of Tesla.
If you can recall, towards the end of last year Elon Musk sold BILLIONS of dollars worth of his Tesla stock.
In fact he sold $16 billion, representing a 10% stake in the company.
You can say he timed that sell well and he is not buying.
I see no reason why anyone would buy this stock when the CEO dumped so recently.
But the thing is, insider selling like this among billionaires and corporate board members happened across the board towards the end of last year in many stocks. Who knows more about whether the stocks are good buys? Someone that is a corporate CEO or insider or someone playing on an app?
Peloton crashed just the other week. According to CNBC, the insiders dumped just weeks before the stock crashed.
And when it comes to Cathie Wood and ARKK fund holdings, the Financial Times reported on January 10, 2022 that insider selling among the companies she invested in completely exploded off the charts in the final weeks of last year.
So, there is a massive dichotomy between what the individual investor and trader is doing in this market and what the billionaires and insiders are doing.
So far – the big money has been right when it comes to the market action.
It usually is.
The smart thing to do is to be CAUTIOUS in this market and not try to be guessing bottoms catching a falling knife.
Giant market volatility and wild swings tempt people into buying, but the big money doesn’t chase daily price gyrations. Instead it looks over the horizon at what is coming and Musk got out when the time was right.
He isn’t buying right now, but he isn’t making his decisions by opening up an app and looking at the daily price gyration.
The Fidelity list of buys is a horrid one, with stocks like LCID and RIVN on it!
This is a market worse than anyone expected so far in 2022. I thought we could see a rally in earnings, but instead many stocks are just blowing up.
NFLX crashed!
TSLA dumped.
HOOD crashed last night.
INTC down 6%. Thursday
Apple did go up a little on its earnings, but it’s like the only bright spot this week. This is a mess.
As far as ARKK, it’s entire lifetime outperformance of its benchmark index is gone!
The Cathie Wood ARKK is a flash in the pan that will be forgotten about in two years, just like the Janus fund of the 1990’s is forgotten.
The game ended last year, but the Robinhood app trader is still playing!
The problem is so many of them deluded themselves into thinking that they were truly part of a revolution changing financial markets forever.
Just a year ago that was a theme during a 48-hour news cycle about the Gamestop short squeeze. Congress even held a hearing about it.
But nothing has ever changed. Even what you are seeing now is nothing new that has never happened before.
Look – the way to buy is to look for the things outperforming the market, not the past fads, but you have to be be cautious in buying anything too. This is not the time for margin and big risks.
I talked about this in a video a few days ago.
In case you missed it you can watch it here.
-Mike
