|"They accumulated low and are now selling much higher. Seems to me the last thing they want to do is accumulate again without first driving the prices down to shake out the folks they have been selling to of late"|
Perhaps, but it is important to look at this market as a channel of distribution. DA Boyz were not alone buying the market during 2001 2002, Investors were there as well. We saw this during Fall 01 and Oct 02.
All the large cash positions built up by channel facilitators only went to work this year. Those coffers are no where filled to meet potential demand from an interested public. There is big money on the sidelines, still large supply imbalances on many individual stocks, and a lot of uncertainty to keep most wondering. DA BOYS first order of business is to get shares into their channel, which is the big brokerages, & fund managers with large retail and professional clients, they are no where near filling up these channels. I see these moves up to now as starting to fill up the channel at wholesale prices.
Like all functioning channels, the channel facilitators like JIT delivery ( Just In Time), when the public moves ahead of the channel, and the smartest are, they'll end up with inventory the channel needs farther out. That is what we are seeing now. Smart foriegn money coming in as well.
DA Boys dont just dump their inventory, that would be stupid with a capital S, they need to incrementaly position inventory, while carefully assessing perceived value. As omnipotent as they are within the trade, its Investor demand that "rates the value", by specific demand, which removes shares from the trade. Scarcity has its value, and wholesale dumping ahead of validation of scarcity asserting its metric is bad for profits. Liquidity plays are in the process of carving out new channels, some will be up some down.
Because all stocks have gone to through the proverbial laundry, they are generally cleaned up and just waiting for a place to go. It takes Investors to make the call.
Investors are the best guage of future value. Those who performed best in the first cycle, are likely to assume new roles as market leaders until proven otherwise. There are wide ranging programs being run to facilitate outcomes, amongst the noize we are seeing Pump and Dumps ( like SIRI) distribution clashes of hugely inflated floats, and shifting fundamental metrics which are confusing folks a great deal. Companies like SUNW & RFMD are confusing many people sending conflicting messages to the universe of potential buyers and sellers.
IMO the Russell 3000 will give many companies a big boost soon as there will be an above average number of companies added and deleted in that key index. Some great upside moves are ahead as the Index's try to keep up with the shuffle.
These moves now are still wholesale, still subject to obfuscation and very much preparation moves for a much broader advance. The trade or channel partners are the ones have been buying the dips, positioning their average costs lower, this should continue allowing them to get a share of the huge short covering yet to come.
The dips are designed to wash the traders share of the market. Traders are like first responders to an emergency, they come, they participate and then leave, eventually coming back as their experience dictates. As long as the balance of traders remains split between shorts and longs the trend will be up.
Thats my take and I'll be sticking to it.
Stalking the bear is still the best game in town.