Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
CHIA Getting Started SSD Crypto Mining by Plotting and Farming on Your Hard Drives Guide - 9th May 21
Yaheetech Mesh Best Cheap Computer /. Gaming Chairs on Amazon Review - 9th May 21
Breaking US Trade Embargo with Cuba - Build 7 Computers in 14 Hours Before Ship Sales Challenge - 9th May 21
Dripcoin Applies New Technology That Provides Faster Order Execution - 9th May 21
Capital Gains Tax Hike News: Was It REALLY to Blame for Sell-off? - 7th May 21
Stock Market Transportation Index Continues To Grind Higher - 7th May 21
SPX Stock Market Correction Arriving or Not? - 7th May 21
How to Invest in an Online Casino? - 7th May 21
Gold & Silver Begin New Advancing Cycle Phase - 6th May 21
Vaccine Economic Boom and Bust - 6th May 21
USDX, Gold Miners: The Lion and the Jackals - 6th May 21
What If You Turn Off Your PC During Windows Update? Stuck on Automatic Repair Nightmare! - 6th May 21
4 Insurance Policies You Should Consider Buying - 6th May 21
Fed Taper Smoke and Mirrors - 5th May 21
Global Economic Recovery 2021 and the Dark Legacies of Smoot-Hawley - 5th May 21
Utility Stocks Continue To Rally – Sending A Warning Signal Yet? - 5th May 21
ROIMAX Trading Platform Review - 5th May 21
Gas and Electricity Price Trends so far in 2021 for the United Kingdom - 5th May 21
Crypto Bubble Mania Free Money GPU Mining With NiceHash Continues... - 4th May 21
Stock Market SPX Short-term Correction - 4th May 21
Gold & Silver Wait Their Turn to Ride the Inflationary Wave - 4th May 21
Gold Can’t Wait to Fall – Even Without USDX’s Help - 4th May 21
Stock Market Investor Psychology: Here are 2 Rare Traits Now on Display - 4th May 21
Sheffield Peoples Referendum May 6th Local Elections 2021 - Vote for Committee Decision's or Dictatorship - 4th May 21
AlphaLive Brings Out Latest Trading App for Android - 4th May 21
India Covid-19 Apocalypse Heralds Catastrophe for Pakistan & Bangladesh, Covid in Italy August 2019! - 3rd May 21
Why Ryzen PBO Overclock is Better than ALL Core Under Volting - 5950x, 5900x, 5800x, 5600x Despite Benchmarks - 3rd May 21
MMT: Medieval Monetary Theory - 3rd May 21
Magical Flowering Budgies Bird of Paradise Indoor Grape Vine Flying Fun in VR 3D 180 UK - 3rd May 21
Last Chance to GET FREE Money Crypto Mining with Your Desktop PC - 2nd May 21
Will Powell Lull Gold Bulls to Sweet Sleep? - 2nd May 21
Stock Market Enough Consolidation Already! - 2nd May 21
Inflation or Deflation? (Not a silly question…) - 2nd May 21
What Are The Requirements For Applying For A Payday Loan Online? - 2nd May 21
How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part1 - 1st May 21
INDIA COVID APOCALYPSE - 1st May 21
Are Technicals Pointing to New Gold Price Rally? - 1st May 21
US Dollar Index: Subtle Changes, Remarkable Outcomes - 1st May 21
Stock Market Correction Time Window - 30th Apr 21
Stock Market "Fastest Jump Since 2007": How Leveraged Investors are Courting "Doom" - 30th Apr 21
Three Reasons Why Waiting for "Cheaper Silver" Doesn't Make Cents - 30th Apr 21
Want To Invest In US Real Estate Market But Don’t Have The Down Payment? - 30th Apr 21
King Zuckerberg Tech Companies to Set up their own Governments! - 29th Apr 21
Silver Price Enters Acceleration Phase - 29th Apr 21
Financial Stocks Sector Appears Ready To Run Higher - 29th Apr 21
Stock Market Leverage Reaches New All-Time Highs As The Excess Phase Rally Continues - 29th Apr 21
Get Ready for the Fourth U.S. Central Bank - 29th Apr 21
Gold Mining Stock: Were Upswings Just an Exhausting Sprint? - 29th Apr 21
AI Tech Stocks Lead the Bull Market Charge - 28th Apr 21
AMD Ryzen Overclocking Guide - 5900x, 5950x, 5600x PPT, TDC, EDC, How to Best Settings Beyond PBO - 28th Apr 21
Stocks Bear Market / Crash Indicator - 28th Apr 21
No Upsetting the Apple Cart in Stocks or Gold - 28th Apr 21
Is The Covaids Insanity Actually Getting Worse? - 28th Apr 21
Dogecoin to the Moon! The Signs are Everywhere, but few will Heed them - 28th Apr 21
SPX Indicators Flashing Stock Market Caution - 28th Apr 21
Gold Prices – Don’t Get Too Excited - 28th Apr 21
6 Challenges Contract Managers Face When Handling Contractual Agreements - 28th Apr 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

How to Profit When the Smart Money Leaves Their Footprints

Stock-Markets / Financial Markets 2020 Sep 04, 2020 - 04:12 PM GMT

By: John_Mauldin

Stock-Markets

By Justin Spittler: Imagine you’re sitting at a bar in Manhattan.  As the bartender’s making your drink, you overhear a conversation from the table behind you.

Two well-dressed men are talking. One looks familiar. He’s a hedge fund manager you’ve seen on TV. You don’t recognize the other guy. But, from the sound of it, they work together.

They’re talking excitedly about one stock, and how they bought $1 billion worth of it today. By the end of the week, they plan to buy several billion more.


What Would You Do If You Overheard This?

You’d be smart to buy that stock first thing the next morning. After all, hedge funds are what’s known as “smart money.” They’re among the world’s smartest and most sophisticated investors. More important, they control a lot of money. When they concentrate billions on one stock, that stock will often shoot to the moon.

Unfortunately, the chances of overhearing a conversation like this are slim to none. But there is a reliable way to know what stocks hedge funds are buying.

Today I’ll show you a unique way to “front-run” hedge funds. To be clear, I’m not talking about reading SEC filings like “13Fs.” As you may know, big hedge funds are required to disclose the stocks they’re buying and selling on a quarterly basis in 13Fs.

Anyone can read 13Fs online. Many rookie traders try to use them to “read the tea leaves” on what hedge funds are buying. Problem is, by the time a 13F is released, the information in it is “stale.” It tells you what the hedge fund did in the last three months. To profit from this information, you need to know what hedge funds are buying now.

You Should Pay Close Attention to Trading Volume

Trading volume measures how many shares of a stock trade hands over a given period. For a trader like me, volume is easily the most important indicator after price, because it clues me in when hedge funds are quietly loading up on a stock.

You see, hedge funds don’t invest like you and I do. Remember, they often control billions of dollars. So when they’re investing in a company, they won’t buy millions of shares all at once. Instead they’ll “scale in” to a stock over weeks or months.

They do this for two reasons: to prevent the price from spiking, and to hide their actions from others who would front-run them.

Hedge funds go to great lengths to hide their tracks. But they can’t hide volume. Huge volume is a telltale sign that hedge funds and other big institutions are buying a stock. But remember, they want to be discreet. So you’re not going to see a 1,000% volume spike.

Instead, look for noticeable increases. We’re talking 10%, 20%, or 50% above normal trading volume. This sort of rising volume often lets me know that “someone big” is buying the stock.

And remember, these surges in trading volume are not a secret. Anyone can see them by pulling up a basic chart.

Here’s how our team used volume to recommend a stock for our premium subscribers late last year. You’re looking at a chart of CrowdStrike (CRWD) stock activity.


Source: stockcharts.com

CrowdStrike is one of the world’s leading cybersecurity companies. It focuses on protecting files saved to the “cloud.” We had our eye on CRWD for a while. Then, in late 2019, we noticed an unusual uptick in volume. You can clearly see this in the chart above (the vertical lines at the bottom). This told us that the smart money was building a position in CrowdStrike.

So, we recommended the stock to our readers on January 6, saying “someone has been loading up on the company’s shares.” Just one week later, we found out that “someone” was none other than hedge fund billionaire Steven Cohen.

Cohen is a billionaire and a bona fide “whale” investor. According to the research platform Fintel, Steven Cohen’s hedge fund Point72 had acquired 2.17 million shares of CrowdStrike, or about 5.3% of the total shares outstanding.

If You Waited Until That Was Public Knowledge, You’d Have Been Too Late

But by scooping up shares when Cohen left his “footprints,” we were able to position ourselves before the masses piled in. In fact, CrowdStrike rallied 20% over the next six weeks after we sent out this alert. It then took a dip during the “corona crash.” But it recovered quickly and hasn’t looked back.

You can also use this tool to rip huge profits out of the market. Remember, all you have to do is look at trading volume. It’ll clue you in to what the smart money is really doing. And let you ride the wave higher, before it becomes big news.

The Great Disruptors: 3 Breakthrough Stocks Set to Double Your Money"

Get my latest report where I reveal my three favorite stocks that will hand you 100% gains as they disrupt whole industries. Get your free copy here.

By Justin Spittler

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

John Mauldin Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in