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Is forced selling behind some of the erratic market swings?

As we’ve been telling you on Fast Money hedge funds have been experiencing huge redemptions. In essence the funds are taking profits to lock in gains.

Now, mutual funds are seeing vast flows of money go out of the stock market and go into savings vehicles. In the past mutual funds would just buy stocks and own them and were seen by the market as a stabilizing force but not anymore.

“We’re seeing money leaving the stock market, about $50 billion has left over the last 3 months,” explains Charles Biderman of TrimTabs Research. “And we’re seeing massive outflows from global funds. Why did global markets do so well, huge amounts of money from American investors.”

It sounds scary, but as the traders say so often, the time to buy is when it hurts the most. ”I think it could be a tremendous buying opportunity in the near term,” adds Biderman. “This is forced selling.”

Pete Najarian agrees whole-heartedly. “He’s right on and when panic hits 30 on the VIX that will be your signal.”

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Trader disclosure: On Sept 9, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (MSFT), (WMT), (UUP); Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Najarian Owns (ETFC); Najarian Owns (AAPL) And (AAPL) Collar; Najarian Owns (LEH) Puts And (LEH) Put Spreads; Najarian Owns (RIMM) Call Spread; Najarian Owns (XLF) And (XLF) Collar; Finerman Owns (GS); Finerman's Firm Owns (GE), (MSFT), (SUN), (TSO), (VLO); Finerman's Firm Is Short (WB), (WFC), (XLF), (IYR), (IJR), (MDY), (SPY), (IWM), (BBT), (COF), (BAC); GE Is The Parent Company Of CNBC; NBC Universal Is The Parent Company Of CNBC

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