Very interesting article I cam across on Seeking Alpha.
>>>> By: Richard Geraci
Signs of a market top. I consider myself a student of the markets in which the learning process is never ending. I suppose that is a good thing if you adhere to the ideology that a trader needs to change with the markets.
Looking back at the markets dating from 1998 up to current day I am noticing a resurgence of similar events I noticed when we were in the thick of the Internet bubble. Surely my fellow traders can remember when (now non-existent) Commerce One was considered a gorilla. Commerce One had traded well over $500 per share and as I mentioned, Commerce One is no more!
igns of a market top.
1) Resurgence of IB (Introducing Brokers). For those not familiar with introducing brokers, they are a non-Nasdaq registered brokerage firms who are in the process of attempting to become a full fledged registered brokerage. The firm is allowed to solicit individual brokers to join their firm and to trade while utilizing the firms trading software and in some cases. the firms capital. Of course you are required to open an account with the majority of capital being yours. In most cases the IB benefits from you trading as they receive a small portion of money for every trade you make, due to you providing order flow. Of course the trader doesn't receive anything for the order flow you are generating. The margin requirements are tight and in many cases traders are stopped out by the IB without any warning to you, the trader of the firm. The majority of these IBs never do make it to naz registration status and disappear just as fast as the popped up.
2)Internet stock POs' that are not generating positive cash flow. DID anyone watch the quick interview with Pandora's CEO Joseph J. Kennedy? He stated (when asked on when he anticipates that Pandora would be in positive earnings status) that he would not dare comment on such things. WOW! Huge red flag!
3) Lastly and most important to me is the soon to come IPO of Face Book. Why do I think this is a final straw of a market top? My point is that when the masses are all on the same side, the jig is up! My prediction is that Netflix will one day be non-existent, just as a Commerce one.
Netflix trades with a market cap of over 12 Billion dollars!
Who thinks that Netflix is a 12 billion dollar company?
Disclosure- I am short Netflix but have no positions in any other stock mentioned. I reserve the right to take on a long or short position at any given time after the publication of my article on any stock I mentioned. >>>