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Seller Heavy Market Bid-Ask Stack Means Lifting Offers Pushes Stocks Higher As Increasingly More Shares Sold
Welcome to reverse distribution. The Bid-Offer stack in the ES is telegraphing the intentions of market participants who can't wait to offload positions, yet are doing so in a way that is pushing the market higher: any bid-side interest is occurring via market trades lifting the ES price courtesy of a massive ask-side inventory which however is locked into limit positions and refuses to go VWAP or market. Yes - sellers outnumber buyers two to one, but unlike panicked shorts who are urgently covering exposed positions, are willing to wait to get their desired price. And with every lift, the NBBO ratchets up one notch higher, creating a feedback loop. The more ask side interest, the faster the market rips, even as the imbalanced market with much greater sell-side interest clears progressively higher! Nothing like selling causing rising prices in this latest installment of the bizarro market.
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This won't end well. When the September to December period arrives and people realize the new taxation schedules there will be no benefit to buy or own stocks and to lock in whatever gains they see in the next 6 weeks.
Bubblevision is going to get awfully bored with 600 million HFT days come 2011.
Aw, c'mon now. Yahoo! gives you the fundamental reasons for today's rally:
TOP STORIES Stocks Feel Earnings Glow- AP
Upbeat reports from Alcoa and CSX to open earnings season sent stocks higher for the sixth straight day. Investors reacted warmly Tuesday to better-than-expected profits from aluminum maker Alcoa Inc. and railroad operator CSX Corp.
The laugh line was two paragraphs down.
"When we go back to earnings and fundamentals, companies are delivering," said Tom Karsten, senior managing partner at Karsten Financial in Fort Worth, Texas."
Earnings and fundamentals? :>)
Even the sceptic man delivers
"When we go back to (revised) earnings and (lack of) fundamentals, companies are delivering," said Tom Karsten, senior managing partner at Karsten Financial in Fort Worth, Texas."
Fixed to reflect reality.
Always worth checking who the bulls are. Turns out they are tax advisors
http://karstenfinancial.com/
Not sure, but I think that was Tom Karsten calling from his bedroom in Fort Worth Texas
Interestingly enough, Yahoo's Market Overview seems to take a more realistic view:
"Investors reacted warmly Tuesday to better-than-expected profits from aluminum maker Alcoa"
More likely .."traders" pissed their pants ( warming affect ) , and shit their shorts.
Booya, nobody "Invests" in this flying pig.
I disagree. The good boys in girls in Congress (and BO too) do exactly what their financiers tell them to do.
Tax schedules ending trading? No way.
The experiment with BO is coming to an end. He will be a lame duck from 2010-2012.
Dates for BO being a lame duck in your interpretation mean that his lameness has laready commenced, which is correct. (2010 - 2012)
Fuck this retarded shit. I'd rather be a pig farmer.
Great!!! And then you can sell pork bell futures.... Wait, I thought you said you wanted out of this market?? :)
Pork bellies.... I have a hunch that something interesting will happen in pork bellies today. (But what do I know, I don't have a PHD?)
I'm interested in getting involved. I smoke a mean applewood hog.
Cool. Do you use papers or a bong?
I'll bring the beer.
I totally agree with you. My relatives were all farmers in North Dakota, and proudly talk of how they "worked for generations to get everyone off of the farm." Now, I just want to go back. Cursing the weather would feel a hell of a lot more spiritual.
At least the weather would be logical.
don't worry, we'll all need to do a little farming soon
"Who runs Bartertown?" Job opening available...
thanks, need a home - Ned
So quite the opposite of the gold/silver market, here we see much larger supply than demand and the prices INCREASE!
what the fuck are you talking about?
I seriously doubt that I can keep this SIMPLE enough for you, but I am willing to try.
You see, in the gold/silver markets there is huge demand for limited supply. The price is being trashed due to the illegal gold/silver paper market at the COMEX - huge demand for limited supply and the price decreases.
You with me so far? Am I going too fast for you?
Here we have huge supply with weak demand and the price increases.
You still with me?
I guess not. Too complicated, huh?
I love a good theory presented by a douche bag as fact. That's simply awesome.
Sorry, I guess you Texas people are all just too smart for me.
Look, I know all about the Evil Empire manipulating gold prices but this makes zero sense:
"You see, in the gold/silver markets there is huge demand for limited supply. The price is being trashed due to the illegal gold/silver paper market at the COMEX - huge demand for limited supply and the price decreases.
You with me so far? Am I going too fast for you?
Here we have huge supply with weak demand and the price increases."
Lastly, I don't understand why you're being such a fucking asshole. I simply asked you to clarify your point and you turn into a gigantic fucking douchebag.
...and when the music stops....CRASH!
This must be your first rodeo.... :)
... and when the music stops... FED buys more!
Ok, Now what? We all know the market is rigged. How does one short Hal the Monolith? What's the plan?
buy?
Did that
HAL: I am putting myself to the fullest possible use, which is all I think that any conscious entity can ever hope to do.
HAL 9000: Dr. Floyd?
Dr. Heywood Floyd: What is it HAL?
HAL 9000: There is a message for you.
Dr. Heywood Floyd: Who's calling?
HAL 9000: There is no identification.
Dr. Heywood Floyd: What's the message?
HAL 9000: Message as follows: "It is dangerous to remain here. You must leave within two days."
Dr. Heywood Floyd: What?
SD, if you change that to a week and two days, you would shit yourself with how close to the truth you are.
Don't you know they type in the closing quote for the dow before the market opens and barring any unpleasant surprises that is how it closes.
Ye Gods.
DavidC
so this is bearishly bullish? Its nice to have a market where if noone does anything it goes up, and if people are selling like crazy still goes up. Panicked selling doesn't seem good yet it is!!
This is just snapshot of the order book. Once second earlier or later it would look heavy the other way. This doesn't mean anything. Even if you're claiming that these offers are actually all trading out (very, very doubtful), so what? I see lots of complaining that the market goes up on light volume. Is it now cool to complain when it goes up while trading size, too?
What volume? We haven't even hit 800 million by 3:30 yet. It's still a very, very thin market. The individual investor is not coming back any time soon.
Agreed. The individual investor is pulling money out hand over fist to pay down credit debt and meet monthly bills. It'll take years, decades to rebuild that wealth.
That great generational wealth transfer we heard about for the past 10 years? This is it. It's being transferred from destroyed stock funds to monthly creditors.
This was posted earlier-flash w/cancel:
http://market-ticker.denninger.net/archives/2474-Market-Manipulation-On-Display.html
- Ned
This has indeed been a funky looking day. I definitely had not seen the individual equity moves one would expect on such a broadly higher day, so in a strange way the above bizzaro observation makes sense. Watching the VIX test its 200dma (@23.44). Yen crosses lost a lot of momentum in the overnight market. I wouldn't be suprised to see a massive rip or dip from here. Sigh, these markets piss me off.
"sellers outnumber buyers two to one"
That in itself is bullish. Follow the biggest money held by the fewest...
C'mon, every single metric is 'bullish'. There could be an asteroid the size of Rhode Island headed our way, and it would be considered bullish. 'Well, commodities should see a boost, since we'll need to rebuild everything.' I'm sure if Armageddon came, CNBC would be crooing the end 'was factored in.' Everything bullish is bullish. Everything bearish is still bullish. No bias either way? Bullish. I know about market sentiment and contrarian investing, but someday, all the 'smart money' is gonna be found out dumb. Everybody's turn eventually comes.
Of course when that day comes (again?), the cool kids will just get another bailout.
WTF is this $hit? When did I get transported into this Loonyverse?
Goldman has sold 600-700 lots in S&P 500 pit at 1094.00 and better. Fasten your seatbelts.
Selling into strength...
I am waiting for the market to invert any second now...
I have added to my short position. Fade me and go long, if you want to get rich.
Looks like Rothshild is buying all the stock in the world.
I for one, heil are new glorious leaders!
HEIL ROTHSHILD!
Is this a bit like the bank holding most of the foreclosed houses off the market to attempt to lose less money when/if someone buys one?
Pan-why, you might be comin' around. - Ned
Well, I just picked this up from "bearish market news" site which shows further evidence of manipulation in "ES". Not sure if this pasted correctly. You may have to paste it to your own browser but it's worth it.
http://www.bearishnews.com/post/3357
Thanks. This made the rounds here on ZH the day (after) Denninger posted it.
Ouch! Missed it and should have known. Thanks for letting me know but man, this has made everything so much harder for a while now. In the end, I'd expect the deepest pockets that can afford to endure a bearish strategy will succeed as this shell game will succumb to gravity. Over and out.
I keep on thinking that ignorance must be bliss because for those who don't wish to look too closely at ANTHING, everything has "worked" out OK, or at least seemed to work out OK, for the past 15 months to 2 years.
For the average Joe who has a smaller 401(k) it looks very good. Why? Because even though the markets may still be down from their highs, the 401(k) balance might actually be higher courtesy of their own contributions over the past 2 years, the company match and the growth those contributions have seen over the past two years.
Particularly for those who don't have large balances in their 401(k)'s and thus most of the balance is made up of recent activity (less than 2 years) things look very good. While the average Joe may "know" things are bad, everyone bases their perspective off of their immediate point of view. If they are still eating and working, things are decent to good.
Until it isn't.
CogDis-You are blowing up both "LONG-TERM BUY AND HOLD" as well as "DOLLAR COST AVERAGING".
Man, testicular fortitude for going against the whole (retail) industry. (of course your are right, especially looking at e.g. chart of .SPX back into the '90's)
Please keep it up (no, not the market, yes, your commentary, no not that ...)
- Ned
"The more ask side interest, the faster the market rips, even as the imbalanced market with much greater sell-side interest clears progressively higher!"
I hereby declare this as the new definition of insanity.
i kind of feel stupid suddenly - can someone explain what is happening here maybe in even plainer terms...?
The big sellers are only willing to sell for a higher ask price, which isn't stupid in itself.
But the new sell price is the ask price, so the market trickles up on low volume as nobody is seemingly willing to sell for a loss.
If I were a seller and I had all the time in the world and knew that someone was going to eventually buy my stuff, I might do the same thing, provided i could wait long enough without needing to sell my stuff to feed my family.
Of course I am newb so I could be wrong.
Good explanation. The question for me is, why are the sellers feeling they have time to sell? In other words, are the sellers also the buyers and this is just another method of pump?
When I open a large allocation of short positions, I scale in over time and sell into climbing prices. No need to rush.
"The price is a worm, and we are all fish". ;-)
Actually, I think that's a pretty astute observation.
Of course, the assumption that big sellers have all the time in the world is predicated upon if the liquidity remains there to pump the system.
Good summary. Buyers need to buy, sellers are waiting for them.
There are 2 kinds of sellers here. Technical guys who see the RSI etc turning back to positive readings, and bearish guys who see a small bounce in a downtrend.
Why can the sellers be patient? Well for the first group, aren't we all more patient in taking profits than losses? And for the second group, their timescale is more like weeks. These guys will be there all through to option expiry.
On another note, who is buying here - there is one huge group that dont get much mention, which is option market makers. They are short a lot of options at these kind of levels, so on a move up they have to buy. They have no choice. And when the market is so thin, they can dominate.
There have been 4-5 short covering rallies over the past 4 months.. shouldnt be a surprise this is how the Mkt goes.
All fizzled out after a week or two. Unles we take out the April high its a Bear Mkt.
Amazingly, the morgage funds aren't performing that well. They are almost the only ones slacking.
It's not hard. low volume, just buy.
Low volume - public not interested in buying, so HFT computers able to inch market higher.
High volume - public interested in selling, so HFT computers keeps dropping bid to buy low.
Well, obviously the market rise is because we're experiencing the healthiest quarter in four years.
According to Morgan Stanley, at least.
http://www.bloomberg.com/news/2010-07-13/import-surge-points-to-accelera...
I'm sorry. My brain just blew up. Excuse the mess...
SWEET JESUS!
IYR has made it's epic journey back to $50.01 with time to spare!
What an unbelievable run by this underdog over the last 5 days. Phew, for a fucking moment there I actually thought CRE wasn't going to make it. But, those kids just don't know how to give up the fight. Why those REITs are just going to get back on that bronco and ride, ride, ride.
What a mother fucking joke. How the fuck is this shit allowed to go on?
k, this is why you have to pay attention to the occult... because these sick fuckers run things by it...
1. 2 days before the solar eclipse, when the dark cresent moon is in the sky, the Amalthea sails for the gaza strip.
2. The Amalthea is a "humanitarian flotilla" commissioned by the son of gaddafi and is manned by iranian and lebanese, among others... they may as well put up a "we are terrorists" sign.
3. Amalthea is the goat from greek mythology, who later transformed into the occult god Baphomet... look it up.
4. the Amalthea flies a flag with the "all seeing eye": http://news.bbc.co.uk/2/hi/middle_east/10615479.stm
5. the ship is arriving any moment now, when the white cresent moon is in the sky.
6. Baphomet is typically depicted as being in between the dark and white crescent moons.
this /is/ the signal. this is world war 3... markets /will/ crash... something abominable is about to happen.
http://uk.reuters.com/article/idUKTRE66C2VR20100713?feedType=RSS&feedNam...
Wait are you being serious? I mean I've been ready for WWIII but I didn't think war would break out over an aid ship sailing to Gaza....and it coincides with some occult?
But can you please tell me what an occult is. Sorry I guess I'm a newb to these waters.
"something abominable is about to happen."
Yeah, im thinking about shorting the market.
Do you work for BofA equity research?
Deep insider rat bastard viper squidders would never, never shake down the sheeple and pants down them paper ponzi wise and leave them standing naked when the tide goes out!?? Bag holding worthless paper they distributed to DIMMS? (dumb ingnorant mental midget sheeple!) Hardly this evil? Poor sheeple betting evil not so black hearted in our fane stream media world that they'd take every last farthing and leave you starving in the streets!! Sounds like an evil designed plan from the beginning of paper being worthless anyway vs real money gold/silver!!!!!
The euro is one big pump monkey..half its components are insolvent. The other half also via their banks.
This is absolutely unreal. I just cannot beleive this is happening.
You will when the market dumps and you wait for the levitation trick to kick in...and it dont.
I love this market! Yum!
I have been watching this for years. Watch the overnight session. Lift the offer and tap it with a 1 lot, it rises like magic. I have seen in the Dow mini futures price slice right thru 10 layers of asks and only execute 1 acutual trade, you can't tell me everyone at the same time lifted all there offers.
The SP 500 mini index futures have the Fed finger prints all over them. just think were we would be if the cash market had to open everyday were it closed at. The Dow would be at 2000. It's so easy to lift the magic futures up overnight, then gap open the cash markets. It's like a free mark up
As warned about earlier, DOW/SP500 remains bullish for now ...
But it's only a counter trend rally.
http://stockmarket618.wordpress.com
One way you can short this fucker is to buy inverse ETF (say FAZ, TZA, DRV) at 3:59PM on a hugely up day at the end of a mini-rally, then wait for screwed up news from Europe or asia to kick the futures down for opening the following day, watch the trend at opening (generally stays down)- stay with that down trend (or sell if up trend) until about 11 or until the trend changes and when they start to ratchet up- get the hell out (bottom to top is generally at least about 5%) - or buy UCO between 10 and 11 when it looks to be ramping up, allow the ramp up until 3:59 and dump UCO at end of the day.
Nervewracking as hell and you can get stung if you don't constantly watch, but it can work. You have to get out fast. No waiting.
Otherwise, it will be death by a thousand cuts. Take any money you make on the shorts and buy physical gold and silver.
Or, just roast the pig.
You should have just seen the open at 4:30 after Intel reported. A gap up 50 points on YM futures. See how easy it is to rig this. Now in the morning America will wake up and hear FUTURES POINT TO A HIGHER OPEN ON WALL STREET. When you watch this long enough you no what will happen.
These headlines will keep folks from selling.
Which "folks" are you refering too?
I don't think it's as much about keeping the few retail investors who are left from selling their shares as it is a propaganda tool to keep the majority of Americans HAPPY SPENDERS.
When the next crash comes, people will close their wallets completely and live off the crumbs in their cupboards.
Let's say we had a 2000 point correction on the DOW in a week. You think anybody would shop for cars, appliances, electronics.. or dare I say .. houses?
It would be over. Done. Fini. The masters know this full well which is why the keep the markets up against all logic.
Only way to protest is to stop playing their game. Short for the final crash when (not if) it comes and stop spending, stop consuming anything other than the essentials. Pay off debts if you still have any. Don't throw more of your good earned money into the throats of greedy bankers that never did anything to deserve their pay.
Starve the beast and if you're balls are big enough, stop paying taxes too.
Sounds too logical. Dow lost 1000 points in the flash crash and nobody gave a shit. Nobody I talked to. I've been encouraging people to get their money out since early '08. The Dow halved and flash crashed since.
You think people look at me any differently now than they did back then when I suggest it might be a wise idea to play it safe for a while? I've shown charts of the dow/gold, debt growth going negative, tons of historical examples of cyclical flows. People still look at me like I'm crazy.
Sorry, 2000 points in a week or a day, not going to change much. Complacency is rampant and people wont be selling or changing behaviors until dow 3000. Sorry. Too logical.
That's because their TeeVee explained to them that the flash crash was due to a computer glitch or an error of some sort.
Also, the crash of 1000 points was bought back quickly by 700 points. Cramer was on TeeVee during that moment and saying all is well, it was a mistake, it had to be and in the background they showed footage of traders giving buy,buy, buy orders.. NICE and Oscar worthy if the real Hollywood would ever be exposed.
The mass of people will cry foul when its too late. They will pretend they made money when they haven't and they will do whatever it takes to lie to you and themselves. Marketing is based upon that principle. People would rather remain ignorant than hear the truth and learn what is really happening.
yeah the unwashed masses will remain willfully ignorant because accepting the truth would mean taking action and responsibility would have to follow. people want to be lied to, actually. anything but the truth, they'll gobble it all up.
denial is the most predictible human emotion. it's also easier, i have fleeting moments when I wish i were still ignorant, this way i wouldnt be so sorrowful at times.
<msacras>Well, it's been nearly 900 points in a week - isn't that good enough?</msacras>
DavidC
Trundle, you have an interesting trading philosophy that might work. How long have you been doing this?
For several months now. I can't see going long in this market except gold and silver, so any action is on the short side (if market melts up Misky-style, I'll catch the upside with my gold and silver). Before the new approach, I tried shorting the market, but I couldn't do it, because I kept getting squeezed after a day or two. After I saw what the bots were doing daily, I modified the approach using the inverse ETFs (note that most surprises in a market such as this one are to the down side- so, if shit is going to happen, it will happen in Europe or something out of China/Japan) I initially got stung a little on a couple of days because I was too eager to get back in- you can't- you have to be patient and only short when you strongly believe that a down day is coming. On a couple of the days when the market tanked (I missed one big down day because I wanted to wait an additional day) I was up quite a bit (like 5-10%). If you're not in when the market tanks on a given day, you can't get in at the open- you are too late. So you have to be in the night before (right at the close when the bots have completed their tasks for the day).
I never short gold. I never sell gold. If I think gold is going down, I short silver, using ZSL as the shorting vehicle. I use inverse ETFs timing my days at the close (patience is absolutely key based upon personal experience), I use DTO/UCO (double short/double long oil price) PHYS and to a lesser extent GTU for gold.
Very nice, thanks for that.
I dont use inverse ETFs but I do something similar with ES and I agree it has worked well, especially in these annoyingly silly grinds upwards in a bear market.
For those on ZH who aren't trading, a couple of things that I think this means on a bigger picture, ZH-style:
1) Fundamentals don't matter except on a weekly timescale.
2) This means the market can go up for days with no reason.
3) If you want to trade this market its a 24hr a day job.
4) You have to think about what the bots are doing, about who you are trading against (mostly technicians, prop traders and vol traders at the moment) but beating them is possible.
I don't think the market is rigged, but I do think its a very tough market to be in. For those who think it is rigged, please look at the weekly charts not the daily noise.
One of the many oddities of an "auction" market.
Damn, NOW I know why the stocks go up when I sell.....
+1
Move to New Zealand and grow wheat. The USA implode is say October 15.
Outstanding Article & great feedback threads Folks - damn impressive site - Since everything is A-OK now here is a proposition for the Federal Reserve PhDs - What is the rationale to providing Fed Reserve Discount Window Access to 'banks' that have no retail footprint - Like Goldman Sachs & Morgan Stanley OR at least provide some restructured Discount Window Access so the American Taxpayer can receive a return on their ('HAHAHAHAHA') investment? You know like TARP & with the windfall proceeds the US Taxpayers can buy NEVERLAND for California transforming it into a Wall Street Retirement Center where the current Alumnia can rest after saving the U.S. economy - Imagine a place where Timmy & Bennie Boy can moonwalk in peace - Sanity for SALE - DIRTY CHEAP!
Those out of the money offers are totally fake, or, if not, they will be wtihdrawn in a nano second when the market rises. you can't make trades based on level 2 anymore.
'Seller-heavy market' thusly causes an ever higher bid....HOW? Who is buying the ever increasing price? I read it 3 times and while I guess the thing to do is just say 'oh, so THATS whats going on'...it completely defies any economic law. Well I guess everything today certainly defies logic and common sense, just the 'new normal', utter insanity.
Your right unless the sellers are the buyers or they are confident they can drive the market up , who would be willing to hold out for a higher price in this market unless you knew it was going higher. CD stated this in his comment above and I agree.
Or QE2 has begun!
Yes that is a possibility, maybe its all of the above. With the recycliing of borrowed money from the FED at 0% interest then buying treasuries and leveraging those for cash, these entities (investment banks/primary dealers/market makers/proprietary trading) probably don't need QE2 when they have the perpetual cash flow which coinsides with the FED's plan of no failed bond auctions and servicing the budget.
Head down to the SPX pit and ask them about economic law. You won't get an essay on supply and demand.
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