Using the Buffett Indicator 4th Quarter peak discussion on October 20, 2024 as a guide, underlying data shows Market Makers are positioning for a decline. Trading data has shown large blocks of stock crossing the tape over the last several months, while the Dow moves higher. This distribution of stock is similar to what occurred in late 2021. Before Market Makers initiate a major decline, they will drive prices lower in a select group of stocks in unrelated industries, such as Boeing, Intel, Nike and Disney shown below. The list of declining stocks will grow as financial news outlets provide an excuse for their declining prices. This is part of the merchandising operation where Market Makers sell stock at peak retail prices and eventually repurchase stocks in a lower wholesale price range.
“By scrapping traditional theory it becomes possible to discover the true order of things, to show how the aspiration of investors can be linked to the aspirations of the specialist [Market Maker] as he proceeds to merchandise his stock.”
Richard Ney, Wall Street Gang, 1974, page 88
Note that this information is for educational purposes only and not a recommendation.
Stock charts courtesy of StockCharts.com.
