An Alarming Trend – Part II

As noted in a previous article, I outlined the stock sell-off every day for one straight week in early June due to program trades:

In the last hour of the day, trades are executed by large brokerage/investment firms for buy/sell orders of mutual funds. If you buy or sell a mutual fund at 9:30 AM, the trade is not executed until the end of the day. When the stock market collapsed in 2008, we saw the same pattern as people dumped their mutual funds and the market declined sharply in the last hour of each day. Imagine this picture without the large corporate purchases of stocks to fund company 401K plans without regard to price at the end of the day to offset these declines. 

This same trend was repeated this week as shown below courtesy of

The graph also shows the loss of 4.24% for the DJIA this week as investors start to flee in anticipation of a market crash as our politicians are stalemated in Washington for a solution. Although a vote is pending for the Boehner plan, we will see next week if the genie has been released from the bottle and Americans have awoken from their apathy. If this is the case, we “extremists” will hold Congress and the president accountable for their irresponsible fiscal policies.

David DeGerolamo


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