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If you were with me at the Black Diamond Conference in beautiful Carlsbad, Calif. last week, or if you watched with us via the live webinar, I hope you found the presentations helpful – and profitable.
But if you weren't with us last week, don't worry. There's still a chance for you to see what my colleagues – Michael A. Robinson, Tom Gentile, and Rick Rule, to name a few – and I were talking about. My team and I will tell you all about it later this week.
In the meantime, I have a special treat for you.
You've been hearing the words "volatility," "crash," or "catastrophe" so often that it's probably starting to get old. That, or worry you more. Either makes sense.
But today, I'm going to share with you something I usually only reserve for readers of my elite trading research service, Zenith Trading Circle. And I don't do this often, folks.
Today, I'm going to give you a peek inside Zenith.
I'll tell you what you shouldn't be worried about, what you should look out for, and, most importantly, how you can profit in the face of it all…
Market "Mechanics" and What They Mean
What's going on may seem a little frightening.
But what's really frightening is what I've been railing about for years: market "mechanics."
Now, there's nothing wrong with the U.S. economy, earnings, or valuation metrics of the market.
What's wrong is how the market trades, what moves it, how mechanically incremental trades by high-frequency traders mask thin volume issues, and the true lack of liquidity when sell-offs happen.
But that's old news.
The new news, what I've been railing about for a few years now, is about the so-called "passive investor movement" and the products they employ.
We might be where I've said we could get to. But the jury's far from in on that yet.
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The real deal is this: There's more than $2 trillion in passive investment instruments, meaning indexed mutual funds and indexed ETFs. If those "passive" investors become "active," we could get another 1987 kind of moment.
We're not there, but we could get there.
The mechanics roll like this: Take ETFs, because they're the trigger instruments here, just like portfolio insurance was in 1987. If passive investors in indexed ETFs liquidate them, the "authorized participants" who run those portfolios must liquidate the underlying stocks that make up those ETFs.
Think about it. If you're running a trading desk that's getting tons of sell orders to dump ETF shares, and you know you must sell all the stocks that make up every unit of all those ETF shares, and it looks like there's going to be more panic selling, what are you going to do?
About the Author
Shah Gilani is the Event Trading Specialist for Money Map Press. In Zenith Trading Circle Shah reveals the worst companies in the markets - right from his coveted Bankruptcy Almanac - and how readers can trade them over and over again for huge gains.Shah is also the proud founding editor of The Money Zone, where after eight years of development and 11 years of backtesting he has found the edge over stocks, giving his members the opportunity to rake in potential double, triple, or even quadruple-digit profits weekly with just a few quick steps. He also writes our most talked-about publication, Wall Street Insights & Indictments, where he reveals how Wall Street's high-stakes game is really played.