This page has been archived and commenting is disabled.
Another (Anything But) Broad Based Rally
A mere two hours into the holiday trading day, and the SPY is already 20 million below the average cumulative volume. With nobody trading, it is time for the straight line up autopilot.
And yes, high volume days do occur on occassion. It is just that they tend to not promote the Dow 10,000 officialy policy guidelines too well.
»
- 5495 reads
- Printer-friendly version
- Send to friend
- advertisements -
Suspicious action in the futures market overnight, it is like someone knew today would be a light volume day (Yom Kippur, anyone?) that was ripe for manipulation...
This it what happens when 70% of the market is traded by computers... We shouldn't have more than 50% volume come from program trading.
It's funny(and sad) to think the same subject was being discussed on Wall Street Week 22 years ago after Black Monday. I don't have the link, but someone posted it on here from YouTube a couple weeks ago.
Lots of talk about the dangers of "program trading" producing extreme market moves.
Looking back, it's odd to think that during the '07-'08 period moves of 20-40 SPX day-to-day were semi-routine.
"Planning for the Next Financial Crisis" by Lawrence H. Summers, 1991
"...the boom is fueled by the positive feedback behavior of some investors.
Individuals who emulate the strategies that have fared well in the recent
past, and so buy stock following price increases and sell following price declines,
are displaying positive feedback behavior. So are the institutions who
use recent history to set their investment strategy. Investors who rush to sell
out when they get margin calls, or to cover short positions when the market
moves up are also positive feedback investors. By increasing the demand for
shares when prices are rising and reducing it when prices are falling, positive
feedback behavior increases market volatility...
The view that bubbles could again emerge in asset markets is supported by
statistical evidence on speculative prices. Cutler, Poterba, and Summers
(1989) document that in the markets for stocks, bonds, foreign exchange, and
precious metals there is positive serial correlation over periods of weeks and
months. This implies that there is logic to short-term, positive feedback trading,
which seeks to catch and ride trends. On one estimate (The Economist
1989), almost four-fifths of foreign exchange trading is driven by technical
systems that give rise to positive feedback. A different sort of evidence comes
from the work of Barsky and De Long (1989) who, in studying the American
stock market, find clear evidence that stock prices rise much more than proportionately
with dividends, as would be predicted by any theory emphasizing
the market’s eventual overreaction to good news...
Kindleberger’s preconditions for crisis are as likely to be satisfied today as
they ever have been in the past. It is probably now easier to lever assets than
ever before and the combination of reduced transactions costs and new markets
in derivative securities make it easier than it has been in the past for the
illusion of universal liquidity to take hold. Asset price bubbles are now as
likely as they have ever been. Bubbles eventually burst. The increased speed
with which information diffuses and the increased use of quantitative-rulebased
trading strategies make it likely that they will burst more quickly today
than they have in the past."
Well, if we take that to be the period where the S&P was over 1400, then 20 - 40 points would correspond to 1.5% - 2.8% trading range. Not really unusual?
Agreed, but that was pretty much the whole way down from 1400s to 666(plus a little during the March bounceback). There were some periods of consolidation thrown in there. Now, if we have a 15-point move either way it's considered pretty significant, and we're up around 1060.
I was stunned when I woke up(late) this morning. The Dow futures were down 30 eight hours ago, and the media are crediting mergers for the ramp job. Yeah...
In a much less extreme way, makes me think of the Columbus Day ramp job last year when the market went up something like 900 points on weak volume in the middle of the plunge. I see strong volume in the first five minutes, then plummeting volume as the day has progressed.
Happy Yom Kippur.
Loved the Columbus Day ramp job! Happened to close out and take over a fund (mis)managed 401K and got a great head start. Rahmp it up!
The latest sideline cash report: American investors have $3.5T in cash - equal to 73% of the S&P 500's net assets - even after reducing money-market accounts by 11%, according to a new study. At the peak of the bull market in 2007, the figure was 62% of S&P assets
There si so much wrong with this bloomberg comparison that it almost defies comment - Uhm yeah investors were buying the S/P based on $106 in EPS forward to drive the market. So if at the irrational peak the market was irrationally valued wiould that not make a percentage comp based on that mispricing irrelevant alos? Just asking Bloomberg
im glad they have access to every single american investor's balance sheet :)
Canadians have one trillion in cash that isn't doing anything more than sitting in a bank. Somebody is licking thier chops.
I'm all for closing the market on Jewish holidays. Wait, I'm all for closing the market, period. You can't manipulate what's not trading, but that's probably more of a 2011 or 2012 phenomenon.
haha thats a bit severe dont you think? closing the markets completely? maybe we should all put in our money together and start shorting the markets on light volume days. im sure we could raise a bit of cash. :)
I find it interesting that while the pump continues a GS analyst thinks treasury yields could fall
perhaps precipitously.
http://www.bloomberg.com/apps/news?pid=20602007&sid=aWb9LpE0yWPY
This seems to back the Hugh Hendry view of shorter term deflation, Tbond yields, down as well as all other asset prices. Rather than believing yields will go higher I believe they will go down as, like the stock market, they have risen past belief.
wasn't hugh talking about longer term deflation, ie several years? i agree, i think we could see a retest of the lows and possibly this will probably mean a depression. what was that about FDIC seriously considering a bailout from the banks? if unemployment is any indication of the severity of this move, we could see a pretty nasty scenario.
So the Hang Seng, NIK and Aus market all slide lots, but never fear, the US futures ramp to new mind boggling valuations continues. But next week starts the show the earnings, how low have they put the estimates? Low enough to walk over I bet, but still not earning enough to warrant the lofty P/Es!
People are saying the financials have lagged today...so we have MS to the rescue! "Credit losses will decline at major U.S. banks." Guess they want a 200-point day.
Seems like we get these 200 pt days every other week or at least once a month which wipes out the entire previous weeks total decline (IF it closes down). I guess we should also celebrate Ramadan, Chinese new Year, so that we get even more days of light volume so more rigging can be done efficiently.
add to the list the public holidays when they should open the markets.
Others can include:
Orthodox Christmas and New Year
+ dates that should be holidays including:
Madonna's Like a Virgin Anniversary (which news in Australia were all excited about today)
Michael Jackson's Death/Birthday/Courtcase Winnings
Ben Shalom's Assasination
Anyone involved in this rigged casino right now is insane. Any who is shorting the market right now should only be allowed to move in public with a straight jacket. END OF.
Once again, the sequence of events points to material participation by Paulson and Bernanke in a conspiracy to defraud the shareholders of BofA. They threatened Lewis and his Board, and further provided them with a material inducement to conclude a merger they knew full well was to proceed without disclosure of the losses or the bonuses or it would not proceed as they - Paulson and Bernanke - had planned all along. This ain't tin hat stuff, this is just garden variety securities fraud.Goldman and Bank of Amerika run the markets along with Geithner, and beagle boy Ben. There is no free markets, only welfare capitalism and socialism for capitalism.
good articles; good articles 4 slow news day ..http://www..
hat tip: finance news & opinion updated daily
Andy,
I am confused. Can you elaborate? You saying gold will go down to the 950 range? Technicals aside, is it due to a rebound in the USD? because I dont see how Gold will go down so much to the 8 handle (like you mentioned earlier) unless USD shoots higher, much higher.
Can't waste a holiday Monday. Only two trading days til end of quarter and the 3Q bonus machine must be fed a super- sized Happy Meal.
These boys got balls made of steel. A cat can't scratch it.
I agree, it is a whole lot more fun to tell those Tennessee bloggers that their front line could not block my crippled grandmother. To heck with the crooks. They will be there after the Super Bowl. Florida takes the BCS Championship this year also.
Dallas by 9.
Goldman and Bank of Amerika run the markets along with Geithner, and beagle boy Ben. There is no free markets, only welfare capitalism and socialism for capitalism.
good articles; good articles 4 slow news day ..http://www..
hat tip: finance news & opinion updated daily