Tesla Inc (TSLA)

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Panic Selling Accelerating; Watch These Sentiment Indicators For A Bottom
By: Tom Bowley | December 4, 2021

As the Volatility Index ($VIX) rises, it becomes fairly obvious that market makers are "on vacation." The primary role of the market maker is to provide liquidity when there's an imbalance between buyers and sellers. Rarely do we see panicked buying when buyers completely swamp sellers. Instead, it's usually panicked selling that has the market makers packing their collective bags. Would you want to commit your capital on the long side to try to stabilize the stock market during a selling stampede? Neither would I and neither would market makers. So they simply sit it out or short it. Remember, market makers are the absolute best short-term traders because they see the order flow. It's the primary reason why we move lower so quickly during volatile periods.

Growth stocks are taking the brunt of the selling, as they normally tend to do during periods of market weakness and volatility. If you want to see what unabated selling looks like, here are just a few examples:

TSLA:



It may not look like much, but TSLA fell 170, or roughly 15%, in just three trading days. If the panicked selling continues next week and TSLA loses its support in the 980-985 area, key price support at 900 could be waiting. The stock market is not rational as volatility expands exponentially.

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