Can we spot distribution?- We look at a hypothetical way to identify market correction.
At Muffett investments, we trade based on algorithmic concepts. We are a multiasset multistrategy funds. What this means is we have a core portfolio of fundamentally strong stocks which we have thoroughly researched and which we believe are reasonably valued. The other part of the strategy focusses on trading forex and indices. This strategy has the advantage of being non-correlated to the performance of the stock market. In fact if employed strategically, the fund will perform much better during times of market correction as we ahve the advantage shorting the indices( many funds are not allowed to do this) if we think that the market is heading for a correction.
Our algorithmic strategies are based around liquidity ( stoplosses of funds). As the market makers are there to provide liquidity, they need to go to both sides to grab the orders. So our concepts are based on manipulation of the market by the market makers. If you do not agree with this, then there is no way we can convince you of our concepts. However if you have an open mind, you will be able to see the glitch in the matrix. Our concepts on forex and indices revolve around identifying manipulation so that we can participate in the distribution. Red pill or Blu pill. It is up to you.
In the case of the indices, the market makers try to hide the distribution( they are selling) by manipulating a few stocks which have big market caps. In the past, this used to be the APPLE stock. Nowadays, NVDA has overtaken AAPL as the most valuable stock. So we monitor NVDA for manipulation. The premise we are using here is that the market makers manipulate the NVDA stock which has a very high market cap and at the same time selling the other stocks. Because NVDA is going higher, even though the other stocks are being sold, the market either does not go down or even goes up. In order to illustrate this, we are presenting the charts of NVDA, AAPL, AMZN, META, US100 ( this is proxy for nasdaq 100) and GOOG.
The chart above compares the relative performance of the above said stocks. You can see NVDA going higher ( this makes retail believe the overall market is going higher) and UNTIL recently AAPL. As you can see the AAPL line was above the US100 line. But see how sharply it has fallen along with GOOG. And both META and AMZN are underperforming by a lot. This suggests the market makers selling these stocks. In our view, the market makers were pushing the share prices of AAPL and NVDA higher to hide the underlying distribution of the other stocks. When the time comes( this only the market makers will know) the rug will be pulled and out of nowhere we will have the correction.
So at Muffett investments, we have started the hedging process to protect our long stock positions. we will keep you updated of the progress.
