Tags: Mirhaydari | stocks | money | professionals

Money Manager Mirhaydari: The Smart Money Might Be Bailing Out of Stocks

By    |   Monday, 31 March 2014 10:08 AM

The recent trading action in the U.S. stock market shows big-money professionals might be quietly bailing out to leave everyone else holding the bag, according to Anthony Mirhaydari, a CBS Moneywatch columnist and money manager.

One sign that the pros are abandoning ship is the fact that equities have been rising in the morning, stalling out at mid-day and then sliding into the close, said Mirhaydari, founder of Mirhaydari Capital Management.

Also, some of the broadest indexes that encompass smaller stocks, like the Russell 2000 and the Nasdaq Composite, are below their 50-day moving averages.

Editor’s Note:
Retire 10 Years Earlier With These 4 Stocks

Meanwhile, hot momentum stocks like Twitter and Amazon are losing air, "money-losing" initial public offerings are being rushed to market so that their owners can make a quicker profit and any bad economic news "is dismissed as non-threatening on the grounds that it only increases the odds of fresh monetary stimulus," he wrote.

"All of this has the air of market professionals trying to hold the market aloft — by holding the Dow, which is watched by regular mom and pop investors, in stasis — in order to exit positions ahead of what they fear will be a . . . downturn."

The "Smart Money Index," which subtracts the performance of large stocks during the first 30 minutes of trading, when retail investors are more active, and adds the last hour, when professionals are more active, is showing very negative results, according to Mirhaydari. In fact, the worst since just before the 2008 market meltdown.

Mirhaydari recommends investors stay defensive, take profits, raise cash allocations and consider safe-haven positions such as U.S. Treasury bonds.

For more aggressive traders, he explained the recent breakdown in big tech stocks is creating put option opportunities in such bull-market high-flyers as Google and Facebook.

Some investors have already grown more cautious, CNBC reported.

The network reported that year-to-date net inflows to all bond funds through March 7 reached $19.9 billion, compared with the $91.3 billion that flowed out of bond funds in 2013, according to fund-tracking firm EPFR Global.

USA Today concluded all signs point to "an undeniable frothiness in the valuation of tech stocks," the traditional growth vehicles that tend to help set the direction of U.S. stocks.

Editor’s Note: Retire 10 Years Earlier With These 4 Stocks

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The recent trading action in the U.S. stock market shows big-money professionals might be quietly bailing out to leave everyone else holding the bag, according to Anthony Mirhaydari, a CBS Moneywatch columnist and money manager.
Mirhaydari,stocks,money,professionals
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2014-08-31
Monday, 31 March 2014 10:08 AM
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