No Let-Up in the Blasting

 | Apr 15, 2014 | 11:03 AM EDT  | Comments
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TLT

The iShares 20+ Year Treasury Bond Fund (TLT) (bond proxy) ticks up. A major biotech falters. Google (GOOG, GOOGL) reverses. And then it's nothing but downside as the sellers -- the truly motivated sellers -- come out of the woodwork and bang everything down that's in the highflier cohort.

It is amazing to me that despite the obvious buy action in the last half hour of yesterday's session and the strong open today, there simply isn't any let up in the blasting.

Think of it like this: If you truly weren't motivated, what would happen? We know there are buyers. We see them at the opening and at last night's bell. All you have to do is be on the offered side and you are going to get it done. There are buyers pretty much all over the place. But the sellers seem almost determined to knock stocks down with their selling. They don't let the bids build. They don't let the obvious buyers take their stock. They just come in with guns blazing.

Of course, the high-frequency traders can run ahead and the short-sellers see it and come in, largely through the exchange-traded funds, and next thing you know you have a debacle where a seller didn't need to have one. This kind of selling is horrid, reckless even, and the sellers' inability to pull away until they are finished explains why the market can pirouette and then crash.

The buyers are skittish to begin with, with the exception of the utilities, which have been smoking. That makes sense as rates keep going down. To me, the reasons for rates going down still are about Ukraine, Japan and China, which reported horrible macro numbers last night that make me think that things are falling apart there. Easy enough given the horrific breakdown in both China and copper.

This time the selling started even earlier than usual. This market is so screwed up that you could argue it will finish earlier than usual, as it almost seems it is done by time, not price.

So I expect that the 2:45 witching hour will lessen in importance. As always, we now have lots of buyers who look stupid and sellers who look great. As long as you have that circumstance, you are going to have a big remorse factor. The only way to prevent this is not to pay up before the market opens. But somehow, the buyers simply haven't figure out this selling process, even as it has become incredibly ingrained in the day-to-day workings of the market.

Fool me once shame on you. Fool me seventeen times, shame on me.

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