You see these large spikes that triggered my scanner?
These occurred on the first and second trading day of January… What caused these gaps you may ask?
Here’s what happens… At the start of every month, hedge funds and large institutions test out new stocks they want to add to their portfolios.
They buy chunks of the stock to see how sensitive the price is when entering at higher than normal volume.
This is to gauge how much they can dump in without artificially inflating the price too much. Generally, they will accumulate shares over the course of a month.
Obviously they don't want to pay more and increase their expense ratio.
How do I know this?
From over 10 years experience at hedge funds has taught me all the pro tricks.
And this is one of them.
These hedge funds are moving mountains of cash into new positions.
But why do these hedge fund moves matter to me?
As they enter these new positions the stock is poised to gain momentum throughout the remainder of the month.
So when these early month moves pop on my scanner…
We ride these babies all the way through till the end of the month.
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