I noticed [Friday] that a few of the Nasdaq stocks such as BRCD, QLGC, EBAY, etc. all sold off at exactly 10:20 and then started rising at 11:30. What creates this synchronization, it seems like a useful tool for trading? Is this all the big players conspiring to set selloff and purchase times? (September 14, 2002)
Intraday moves in the market result from any number of variables, e.g., a test of support or some news item. There were some strange goings on in Florida early that had an impact on the market as well as more hawkish comments about war with Iraq. When an event occurs that impacts investors, you see stocks and/or indexes move as the big money players (typically hedge funds in these lighter volume conditions) react. Individuals don't have enough clout to move the big cap stocks, so we know that the bigger money is starting to act. Sometimes the moves are triggered by certain price levels that may be hit due to outside forces or hitting a certain price level. Funds often have what you hear called 'program trades' that are set to buy or sell futures or stocks when certain levels are hit. Thus you can see a rally materialize when a certain support level is hit as a program says 'buy now' and a basket of stocks are purchased. It is not so much a conspiracy as it is just big money with a lot of clout starting to buy or sell. That can trigger other programs or other big money as volumes hit a certain level. As the little guy unable to move the market with our positions, it may seem like a conspiracy. It is really more like crossing a railroad track; do we try to butt heads, do we get out of the way, or do we try to jump on. Day traders do that; we prefer to see a trend and jump onto the trend as there is less chance of getting run over.
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