The games MMs playI found this on another board. It is very relevent to our present market. It's basic but true.
From the OTCJournal
Market Comment
The last 10 trading days have been brutal. The NASDAQ has given back nearly all of its January gains which were triggered by the surprise drop in interest rates.
This is the perfect environment for Market Makers to profit from weak investor mentality. Market Makers are whipsawing small investors, allowing stocks to trade up temporarily so they can get short, and taking them right down to frighten investors into selling at lower levels. It's an old trick to line their pockets on the backs of investor fears in a weak market.
Most individual investors make the fundamental mistake of thinking they own a good company if a stock is going up, and wondering what's wrong if a stock is going down. This is the psychological game the market makers are playing to convince you to sell them your stock when it's low.
This is an environment to accumulate on dips. The bear market is not going to last forever. The Fed is more aggressive towards stimulating economic growth than at any time in the last ten years. Stocks are priced for a full blown, long term recession.
The market has already discounted stock prices for a recession in the first half of the year. If we get economic indicators showing the economy picking up the bull market will return in this decreasing interest rate environment.
Investors accumulating stocks on dips in this environment have a high probability of making excellent returns over the next one to four months. Stick with the companies you like and add to positions on low volume dips. Take some money off the table on high volume rallies. Most of all, have patience in this market environment.
Take care.