NEW YORK (Real Money) -- So, yesterday, the Russell index had its worse day since April 25 when it fell 1.86%. What does it all mean? Is it a sign that Janet Yellen is having second thoughts about easy money now that a bunch of firms have come out and said that rates are going to go higher sooner? Is it a sign that the market's gotten overheated and we are at a top right when earnings season is about to begin, a sure sign of pain ahead? Is this the beginning of the end of the big cloud bounce-back, right when the right shoulder says it should be forming?
Or is it because some large account liquidated its Russell 2000 positions and we all had to pay the price?
I bet it is the latter.
We have to accept that the volume in actual stocks away from exchange-traded funds is simply fractional. A motivated seller without a lot of horse sense, someone who hasn't been in the game long enough to know that you can liquidate slowly, or, alternatively, someone with little to no patience can wreck this tape lickety-split.
Think back to the horrendous momentum selloff that started at the end of February. That was all about supply overwhelming demand and all deals failed, even the good ones, although most were, indeed, bad ones.
Then we got the resurrection that began when the insider selling ended, the shorts pressed their bets and the IPOs simply disappeared. Oh, and of course, the takeovers decreased supply.
But for the most part this last move occurred in a nonearnings-related vacuum.
I think that other than biotech, which actually broke to new highs, we are looking at some hedge funds saying now, today, "This is our chance, because there's a big seller in the marketplace and we can run ahead of him."
That's the same stupid thinking that cost hedge funds so much the last go-around, when the selling dried up faster than they could cover their positions.
No matter, be aware that we talk about markets being thin all of the time, but we rarely talk about the impact. On Thursday's half day, the impact was super positive.
Yesterday's impact? Something that truly had the appearance of the beginning of a correction that might very well be one huge seller trying to lock in profits.
I wish there was more to it, but there probably wasn't.
Random musings: I talked about takeovers all day because they are so immune to earnings, hence the Abbvie "buy Shire at any price" modus operandi.
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This article was originally published on Real Money at 8:22 a.m. on July 8.