More Shades of 2000

 | Apr 10, 2014 | 6:20 PM EDT
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As I reviewed biotechs and techs to identify common weaknesses tonight, I was struck by the one thing I was most afraid to see: massive insider selling by people at every level of the companies. It's endemic.

And that's the 2000 thing all over again. It's gotten even more eerie when you consider that right at about this time in 2000, we started having nasty swings like we saw yesterday and today. At that time, the whole Nasdaq was overvalued, so there was a long way to fall, especially because we had come a long way in a short time.

This time, we've come a long way in a long time, and many very solid companies have been responsible for that run. But we all know that the last leg of this run saw a level of supply that has overwhelmed momentum funds and levered hedge funds alike.

Now keep in mind that we are only 3.5% from the highs, and we have seen lower levels just this year, but today the pain spilled over badly to the financials. In fact, that was the really defining element of the session, as interest rates plummeted when they should have gone up very big.

I am a broken record about the issuance. It has to stop for this market to be anything but "sell the rips and short 'em," which is now the prevailing wisdom.

But we have artificial help in both directions. As Herb Greenberg writes, the heavily shorted stocks were a huge part of the run-up. Now the insider selling at many of those same shorted stocks is breaking the dam.

The bulls must hope the busted Ally Financial (ALLY) was a wake-up call that there could be a better time to sell than now and that the market won't bear up any longer. The bulls must hope, also, that the Nasdaq hits a level where hedge funds and momentum funds can't or won't or don't have to sell.

Otherwise, the 2000 comparisons will keep occurring, and the selling will get heavier, not lighter, as we go along. 

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