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Testing... my pic.
Hey, give the bag back, I had it first!
Argh. Nevermind. Nice work as always, TD.
I just want to say: Thank You!
Thanks for this analysis TD....kind of amazing when you think about it that a handful of stocks represents such a massive percentage of trading. As robo would say, it's the riverboaters.
Would be good to have a long term chart of NYSE volume excluding the volume in these 5 stocks.
I know recently volume in general has been low, but I think if you compare the NYSE volume ex these 5 stocks, we will really be ridiculously low.
I love this question:
if the SEC considers 5 stocks accounting 30% of all NYSE volume as a normal phenomenon, one wonders just what would cause their computerized alerts to actually go of?
I suspect it would be a number less than 1 causing at least 50% of the volume to trip the warning bell.
Brilliant analysis as always. Thank you. I wonder if there will be a place for a class action lawsuit on behalf of those who have owned financial inverse ETFs like SKF, FAZ.
there's at least one such lawsuit going already:
There is an attempt at a class action suit regarding lack of disclosure for the SRS. However, these are not ETF's to own. They are temporary rentals, hostels if you will, for minimum stays. Due to daily resets as well as the mechanics behind them (which have nothing to do with the underlying stocks) it is truly a case of know what you are buying before you get in the leveraged ETF game. Full disclosure, I trade many of the 2X leverage index ETF's daily and have been involved in Profunds since inception. The longest I have ever owned a leveraged fund or ETF has been 2 weeks. That was an extended holiday.
i agree but why did they do reverse split when FAZ went down to 4 bucks ? While FAS was not. This is because they can milk whatever is left of shorts. Now anytime financials go up, FAZ loses its value in big steps. If they would have left it at 4 buck, the % drop would not have been of much use for MOMO. I think this is outright fraud. If they do reverse split - they should have done it at both sides of the equation - for both FAZ and FAS. Simply bastards.
I'm not sure if you don't understand how percents work or how stock splits work.
I assure you, the consolidations were a good thing.
At $4 it was ulcer inducing for daytraders, and the ECN fees were deadly.
This is so bizarre. These five stocks should not even be tradeable right now. They are all worthy candidates for the top five worst stocks list.
What's the most heavily shorted stock on the NYSE right now? I tried to find it, but the only service that offers it is a pay service and I don't feel like paying. I know the short interest in the financials in general has decreased dramatically. As of the last reporting, BAC has only a 1.8% short interest. Which is extremely low. C went from around 20% down to 6%. WFC is just 2%. Shorting the financials has become a losing proposition. Especially since they got serious about enforcing the ban on naked short selling. Or has it? Maybe that's evidence right there that going long the financials has become a really crowded trade. Or that USED to be how it went, anyway. None of the old laws of trading seem to apply anymore. Like, I bought into FRE @ .91 a couple of Fridays ago when the reported. It went from .72 to over a dollar in AH trading, and then came back down. I was sitting there debating whether or not there'd be a sucker's rally, and then I just knew. I got myself about $15K worth of it @ .91 and .92, and sweated it a little over the weekend. But not much. Sold it right at the open on Monday. Just about doubled my money. It was nice. But my point is is that should never have happened. FRE is a worthless company that shouldn't even be trading at all. Even this new CEO came out and tried to sound a note of caution, saying this was a one time deal and they were still looking at massive losses. And yet, still, here we are, two weeks later and it went back up to almost $2. None of it makes any sense. But I'm trying to trade with that in mind.
Here's another for instance - since C went to $1 back in March, at least 3 times over the course of the next couple of months, in April and May, it got up to 4.60 in pre-market... and each time it did it came crashing back down right at the bell. 4.60. It was like the magic number. It became so easy to play. Well, this Friday it got to 4.60 in pre, once again. Only this time it didn't come crashing down. It actually got up to 4.80 or so in regular trading, to close @ 4.70. I was pretty sure they were gonna crash it back down to 4, in order to make to 4 calls AND puts expire worthless. That's what they did last month to the 3 calls and puts. It's a ruthless strategy. But, for some reason or another, this month they weren't able to do it. Those 4 calls were up about 200% in 2 days - Thursday and Friday - and expired seriously in the money. My point is that they shouldn't have, if you went according to the rules that have seemed to dominate the financials over the last few months. It's whole new game out there.
Tyler, a huge amount of our government's expenditures are unnecessary--i say, take all that financial funding and allow it to be a new division called ZH Investigation Group, led by you, which feeds files to a new, NONCORRUPT court designed for prosecuting the crime that is overwhelming our country.
I am still convinced that at this point, the financial system has 80%corruption/20%righteous fiduciary types and that this 80% is being protected and supported by the fact that the owners of the privately held federal reserve own half of the DOW, and the biggest interests in the top hedge funds, and as such, the policies that enable the corruption are bought by the group think (and fear) by our politicians that he have to cater to the interests of this group.
The interview by William K. Black at the Hammer Institute, made my eyes pop out with horror when he explained that the crimes from the subprime meltdown alone, are too much for the "system" to handle. What are we going to do?
I find Cramer's Mad Money episodes for the last two Friday's rather interesting and foretelling.
First show: 25 rules on how not to lose money.
Second show, last night: Use a rally to sell and prepare for bad days/portfolio management.
I conclude that Cramer is preparing the sheeple (those that will listen) for the upcoming slaughter so it can't be said that he didn't warn them.
I noticed the same thing. But I give him more credit. I think he knows its coming but he feels a social responsibility to warn without sounding the alarm.
However, most wont act until its too late. "Why now when this thing keeps going up?"
1st off that ep friday was tape and probably a rerun
2nd, he is overly bullish on his paid sites at realmoney.com. he thinks bears are dumb whiners who are clearly wrong. he chimes in occasionaly on risk reward and about scaling out but rarely on tv unless its a teaching session like on friday
he isn't that savvy, merely hedging himself
"First, note the volume drift of the SPY since March, the best proxy of overall volume participation via key money managers"
If HFT is as prevalent as claimed, SPY volume (and participation by key fund managers) is irrelevant.
SPY volume is irrelevant anyway since total volume should be quantified by the S&P 500 index not an exchange traded fund.
While the volume of the two can share similarities, there is no guarantee of that happening. Such is the case currently where SPY volume is down since July and actual S&P 500 index volume is slightly up since July.
That is the whole point of nationalization of insolvent companies,that I use to always wonder about the necccetiess of. Just so that those companies do not become vheicles for money transfer as they are now. In this case,those companies were effectively nationalized,however,practically they were not. And they became nice vehicles for money transfer from people outside the loop to people inside the loop. If you all remeber,Aig in fact did drop to a low of 8 something(equivalent .4) most probably due to short. And then back up to the 30's level. So wouldn't it be nice to know "when you are allowed to short" and when the short squeeze is coming?and I am sure there people who know..............
Any stock with 6.4% short interest is prime for a short squeeze.
I have a question.. GS is making $100M a day by buying and selling a stock +.01/-.01 all day long and getting their liquidity bonus of .001 (or whatever it is). Where are the exchanges that are paying out this money getting it from? I don't think they would be putting up with that if they were not getting paid themselves. And how are they getting paid?
The exchanges sell "market data" streams
From the liquidity removers of course. (Basically any "market order" is charged a per share fee)
For example: http://www.nyse.com/equities/nysearcaequities/1157018931977.html
It all depends on your broker, but they all charge it; either separately, or it's part of their standard pricing if you are still paying >$25 trade.
And I don't think many brokers will credit you the rebate they collect for your limit orders.
This may be stupid and irrelevant but this feels a lot like be a probe of or an actual attempt to corner the market. When was the last time we've had a honest college try of it, 1907?...I'd say we're due. If that was the goal then it wouldn't be a single group but mostly likely several groups colluding on sort sort of level. And I'm sure there were other attempts at it since 1907 but I can't think of any on this scale if this is indeed one such attempt instead of the "lure all the retail investors in to dump to them" oldschool play, although that is always the contigency plan regardless of what the prefered goal is.
Again...could be just the paranoia speaking here but it is a question to ponder as to its feasibility in this environment.
Well in those days (early 20th century, late 19th) there were a lot of Great Recessions.
W.D. Gann in 1935:
'After the greatest bull market in history, the greatest bear market in history must follow... my philosophy is that one must look back in order to determine how long the bear campaign might run. Going back over all the records, we find that the greatest bear market had lasted not more than 43 months and the smallest had been as short as 12 months. Some of them had culminated around 27 months,30 months,34 months and in extreme declines,anywhere from 36 to 43 months.'
Things have been 'calmer' since... 13 recessions since 1929 lasted on average 10 months. The longest,the Great Depression, lasted 44 months. The third longest(1973-1975, 1981-1982) each lasted 16 months, and we're in the second longest and counting.
The stock market capitalization as of July 2009 was roughly $3.2 trillion USD for Chinese companies and $11.2 trillion for US public companies.
Just a few thoughts I had on trying to understand the big picture.
Those are good questions! Somebody might have the answers but not me, but i'd like to offer some musings.
DTCC- after hearing a pro shorter (sorry, no link) whine about any attempt to force delivery, my gut tells me that there are way more "certificates" than issued stock; for at least major issues but probably all issues.
Hedgies- for the most part, these are big money folk (the 5% that own 80%+ of "wealth) who work, imo, lockstep with the policy objectives of the boyz. Brownshirts, if you will.
Pension Plans- run by hedgie types, but use opm.....sweet deal and who gives a shit about joe and jill, eh?
Fed- hedgie of hedgies.....controls all accounting "law" and accounting "practice" and yadayadabla....
Roman generals used ossuary (bone throwing and reading by adepts) to battle plan. So here we are, trying to pick over the bones lying on the field that we can see, and trying to discern the plan, let alone the outcome.
Like you and most zher's, we try hard to follow, read the entrails, second-guess, and even make a profitable trade! based on those bones. Sorry for spewwing but needed a system purge.......thanks for the outlet:)
Mr. Gary North has the scenario we are seeing. He is a Man beyond reproach also as this site also giving a running account. The numbers would fasinating also given the timeline effect over a few years. Some of the central bankers expect the minions to expel bubbles every two years to kill a chicken to scare the monkeys also. IMO
I actually own 3 out of those 5 stocks for the last few months, and they ALL made super money!
unusually high volume means it's either the beginning of the trend or its end. most momo's and traders wannabe will be killed as usual.
besides, those who got some from the pipe offerings are just happy to unload after such a pump, including John Paulson.
short XLF, IYR
there's a great old interview with some basics about the trading from my past Professor(he is a great guy), enjoy:
At least 4 of the 5 companies have heavy government involvement. Perhaps that's the common denominator and there's pure speculation (or otherwise) that some beneficial actions will be taken to favor the shareholders.
That is some serious jello stirring.
I'm short the financials since 7/15 and eventhough I'm getting killed right now I will not cover. I keep adding to my shorts on every pop. I do not trade on margin and I can hold for years if I have to (call me a short camel if you wish) but this BS will not last...
And if they ban shorts on the financials again?
Until you are forced to liquidate by your brokerage.
When you consider the shi%storm the insurance complex confronted post selloff (FICC & Equity VAs), a reversal would bring those companies straight back to their knees. Unless they used the rising equity markets and vol compression to lay out hedges to offset the further decline? Wouldn't that be the obvious route? Even if expensive, who in their right mind would take the other side of those traders? Could the ramp in the derivatives on the Fed's book - pure speculation - be subsidized insurance hedge laid out "in case of emergency" - kind of like AIG had to pay out...
When you consider the shi%storm the insurance complex confronted post selloff (FICC & Equity VAs), a reversal would bring those companies straight back to their knees. Unless they used the rising equity markets and vol compression to lay out hedges to offset the further decline? Wouldn't that be the obvious route? Even if expensive, who in their right mind would take the other side of those traders? Could the ramp in the derivatives on the Fed's book - pure speculation - be subsidized insurance hedge laid out "in case of emergency"
brilliant Tyler -- as usual
Awesome stuff Tyler, the market is a ponzi scheme waiting to burst at the seams!
Government ramp job on the banks. The bailout simply can't fail, the peasants would go bonkers.
TD: Just returned from a very Social 1% EE party. Several central bankers and IB were quietly discussing ZH. They are crapping themselves...Bravo...Bravo. Vampire Squid HFT is the new Zietgeist!
Face it, This mkt is going to rip another 20%. ( I am short as well as everyone I know) It's whatver you want to call it. Ramadan or whatever Art Cashin never happened, nothing can bring this thing in, I am going long at 10am tomorrow. I am capitulating. Fuck my life.
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