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Themis Trading: "Principal Program Trading Is A Way To Get The Market Go In Your Direction"
Joe Saluzzi of Themis Trading on Bloomberg TV, discussing several critical topics previously covered extensively on Zero Hedge: the real state of the economy, high frequency program trading and outright market manipulation.
To quote Joe:
"I have a feeling one day the door is gonna close, everyone is going to be running for the exits, there is going to be a major move in the market and everyone is going to wonder "what happened?"
There is problem structurally in the equity markets that nobody wants to talk about. There is intervention, there is manipulation going on. No one has exact proof of what is going on but it's out there, and the real liquidity has been gone for a while. People don't understand, the liquidity is not coming back."
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Is anyone else getting screwed up and wrong quotes on Proshares ETFs in the past 10 minutes?
ZH,
Frontrunning your soon to be posted chart and question about what happened to the $ just before noon NY time:
a story ran on China requesting a reserve currency discussion at the upcoming G8.
it is good to see more people talking about these issues
we need to keep this kinda talk alive and well
I saw this yesterday and was floored that someone is bringing it up publicly. Props to Joe and his firm for standing up.
The whole attitude of the surviving upper Wall Street tier is "if the shoe fits, steal the MFer.
"People don't understand, the liquidity is not coming back"
What is not to understand? THey have already stolen all our money! We have nothing left to invest. Now they are just stealing from each other. THey can keep that going on for.....HOW LONG???
good video and good distinction between volume
and liquidity......
i am sure most if not all technical traders will
vehemently disagree but i cannot possibly see how technical trading can be valid under such scenarios where deliberate market manipulation occurs.....markets are not made of patterns and time series analysis - they are made of mice and men with the latter ever more egregiously intervening to make it go their ways.....
I love it that even these people know Franken is a bozo.
Yea this stinkin Wall St greaseball is the authority on character.
Can't get a tylenol... what a tool.
I have been trading the market for many years and this market today, well I am speechless about it. Fair comments by Joe Saluzzi.
This isn't a stock market, it is gaming machine
In over 30 years I have never seen anything like this except in commodity markets. His mention of lack of liquidity would lend to a comment I made long ago that the stock market had become a commodity market and was wide open to rampant manipulation.
Socrates
Me, too. I have been trading since 1997. Never seen anything like it either and I trade across ASX, Asian markets and US markets...it is criminal the way these markets are going! They should put a sign out to real traders...closed for business, programmed trading only...what a scam!
"In over 30 years I have never seen anything like this except in commodity markets."
that's an interesting statement. It might be the indication that "buy & hold 'em" strategy is dead for now. Short term trading and lack of desire to hold anything over the weekend dominates, that's why the current equity market resembles commodity markets. Well, that would be my guess, and if it is right all of the VAR assumptions go down the drain.
After the 1987 crash the market was pitiful for about 4 years. These traders know what the economics are and what the wave counts are. They know if this market breaks 900 in the S&P and then 800 it could be on its way to under 500 by year end, where it belongs. There will be no money to be made at that level by these program traders.
All of this explains why there is manipulation to hold the market up, but economics win in the long run and that trap door's hinge has been oiled.
Socrates
Oh valuations and basic fundamentals(which the market should actually trade on), it should be at that level!
As for the trapdoor, if they get rid of most of the shorts then the fall will be very fast indeed and they will have created a true monster by their constant fiddling
There is an article within the last 4-6 weeks stating that we have reached a saturation level where all stocks are overvalued and the cheaper ones (the lowest 100 of the S&P 500) are especially overvalued. The author cites that the big reason for the 1987 collapse being so severe was that EVERYTHING was obliterated because everything had to be sold and only rock bottom prices were bid.
My friend was a specialist on the AMEX that day. The partners in the firm were each worth about 410 million. It took them close to two years to wait and unwind what they ended up with and each lost about $3 million and closed up and retired, saying they would never expose themselves to that again as they got a call during the crash cutting their line of credit in half.
A 1987 event was what would have happened on Sept 18th (or maybe the day was the 19th) with redemptions after Putnam announced 95 cents on the dollar. That's when the "insurance" fund called the FDIC guaranteed more money, which was akin to writing a loan shark an IOU that was 10 times the size then due and having him think his money was now safer.
Socrates
P.S. At S&P 350 the mkt is probably a long-term, geenerational buy for your children. At least you know what your risk is.
Stunning to finally see this openly talked about on a major network. I'm hoping the meme catches on and creates critical mass. Joe, great job & please come back!
Yes, the meme, remember the meme!
Bozo is a real pimp.
REAL unemployment is DOUBLE the 'official' statistics. GOvernment has been playing major games with all stats for a while now - both parties are to blame.
good articles
Having said that, unless we rethink the way we use our wealth, this world is doomed. al-Waleed bin Talal, however he came by his wealth is in a position to make a difference. Instead he chooses conspicuous self-consumption.
With an SLP discount of 15 cents per 100 shares traded and if GS's PPT volume is a billion shares per week that averages out to around 75 mil a year from the NYSE. For a company whose revenue was 53 billion last year, I don't understand the risk/benefit of market manipulation for a payoff that small. The benefit comes from being the market maker. As long as the quants have humans to beat up on (along with quants running on Commodore 64s), they'll keep trading and driving up the spread. But once what little upside volume there is dries up, its all over but the crying. Unless you believe in triple digit PE ratios.
Bottom line: The quant with the slowest CPU clock time is going to be left without a chair when the music stops, along with every little guy who decided to smoke the green shoots.
Did the Woman (co-interviewer) actually blame the mess we are in on Freedom? "Well, Look where all this freedom got us!"
Seriously?
this is a majorproblem
I have a friend who writes the algorithms for the heavy hitters in this program trading system. (No shortage of job opportunities because there are very few PhD in physics out there; it is totally dominated by europeans). He tells me very honestly that it is about to go bust because millions of shares are trading being traded and someone is going to get caught holding the bag. These guys trading millions of shares placing their bets in milliseconds not caring about valuations or market trends,etc. He says it is the next major bubble to burst.
Please tell us more!
Yes, pretty please...
This is a financial coup d etat orchestrated by Wall ST in conjunction with the U.S. treasury to consolidate power
into the hands of the people that caused the problem in the first place, such as JP Morgan Chase (originator of
credit derivatives) and Goldman Sachs
Alt A and Option Arm loans-reset-the entire recovery-based on accounting fraud
Alt A and Option Arm loans will reset soon. And don't forget the entire recovery has been based on accounting
fraud- namely credit value adjustments.
This is a financial coup d etat orchestrated by Wall ST in conjunction with the U.S. treasury to consolidate power
into the hands of the people that caused the problem in the first place, such as JP Morgan Chase (originator of
credit derivatives) and Goldman Sachs
Alt A and Option Arm loans-reset-the entire recovery-based on accounting fraud
Alt A and Option Arm loans will reset soon. And don't forget the entire recovery has been based on accounting
fraud- namely credit value adjustments.
Eventually given a sufficient lack of liquidity, the Principals will have the government close the exchanges rather than suffer losses themselves via a market collapse.
Retail investors will find that their accounts are frozen and their money impounded. When trading resumes their accounts will be rectified according to new regulations and they will risk seizure of assets because of newly-defined malfeasance - on their part!
My greatest fear is that due to some event - say a Chinese collapse coupled with a major bank revealing it is in trouble and a state (say CA) going under - we could see a bank holiday declared. Due to massive order imbalances and liquidations of positions mandated to take place at the previous closing price, shorts would get nothing and longs would be bailed out, so those who have picked at this pile of crap might have the game closed when they are right. If you think rules can't be changed I suggest you look into what COMEX did to crucify Bunker Hunt and silver. The made the active months liquidation only. With no new buyers the maret collapsed. Isn't that the same as there being no buyers under that trap door?
While Summers is a snake and Geithner a crook, IMO, Obama is just not a bright man (Mark Levin repeately calls him an idiot) and worse, he is a very weak man. The worst despots have been those who only knew how to lash out with a heavy hand when hard decisions were to be made.
It is abundantly clear that Obama's ability to bring people togeter is non-existent and we know he would sign any executive order that "he" felt was necessary. The exchange could be closed for 30 days.
The price of amunition, and the astonishing shortage, has not doubled and tripled (depending upon caliber) for any reason other than fear of what could happen with the stroke of a pen by this communist sympaathizer who just showed his colors in South America and gave his words of opposition to the removal by the rightful military removal of a despot in the making in Honduras. Obama will bail out the oligarchs just a Putin did because Obama is one of them. Although a stomne-cold Marxist, like Marx, he feels those who rule the lives of the people are different and they shouldd be handsomely rewarded for their troubles.
At S&P sub-500 this is going to look like the bar scene in "The Crying Game" where after Stephen Rea sleeeps with, and find out, that Forrest Whittaker's "girl" is a guy, the entire bar is now clearly populated with cross dressers when they all looked normal in the scenes before that. IOW, the obvious will be revealed to all.
Socrates
tool
Many people know what the plung protection team and the GS have been doing to manipulate the financial markets, especially stock market. short gold and support stocks with its proceeds or convert bailout or stilulus money into stock speculation for the high frequency programming trading. never use the remaining money for small businesses or consumer lendings so we will keep on seeing the deflation for a couple years more. America needs deflation desperately to drag down the rest of the world with us. this disaster should not the unique American problem. this must be a world problem. My point here is can anybody out there has the capability to incorporate all those data and market manipulations by the government and GS into our current working models so that we traders won't lose money any longer. Any comment?
Imagine how great it would be if the public really knew about the PPT...of course the x-enron lobbyist for the fed would spin it as national security, and maybe even paulson would come out of hiding and say it is there to save us from the end of the world....blah
Obamma,s policies may not be working as well as many had hoped:
The market keeps rebounding. It needs to be much, much lower. Americans are being scammed and nothing being done about it.
The worst is yet to come
hat tip to: http://www.bit.ly/12NCJR
just viewed these from Keiser broadcasting from Europe
On the Edge with Max Keiser - Goldman Sachs 06/26/09
http://www.youtube.com/watch?v=QMek9D7t6l4
http://www.youtube.com/watch?v=NL0d8ZXtxvM&feature=related
Goldman Sachs economic false flag attack
http://www.youtube.com/watch?v=x15tSbt2mnA&feature=related
" I don't think they ( SEC) will reform"..." I worry about the retail investor" "These programmed trades do not give liquidity"
JEEZ! What chance have we got? Why bother!
I'm concerned, The video says June 30 at the close and i could swear we closed up on 30th not down as shown here.
Whats going on?
What do we buy?
Stuff they're not interested in. Small junior miners trading 40,000 a day. Trade in overseas markets. Stocks in which the fundamentals haven't been affected by credit problems: small commodity producers with their hands close to the actual goods, not index funds. Not ETFs. Other stuff I buy is nice and shiny and sits in the safety deposit box, where it can't be manipulated...
A word to the trusting:
"All safe deposit boxes in banks or financial institutions have been sealed, pending action in the due course of the law. All sales or purchases or movements of such gold and silver within the borders of the United States and its territories and all foreign exchange transactions or movements of such metals across the border are hereby prohibited."
-quote from the Gold Confiscation Act of 1933
http://www.austincoins.com/confiscation.htm
Safe deposit boxes ain't so safe if the government decides what you're holding isn't yours...
I know, I know, it can't happen again and the government would *never* try it *today*...
Ahhh, you're referring to back issues of Hustler anyway aren't you.
OK, an hour ago I said where the hell's my avatar.
Now, I've got an avatar again but it seems I've been absorbed by TD Himself.
How delightfully governmental of you, TD.
Interesting article illustrating exchanges payments for liquidity...
NYSE Joins the Crowd and Pays for Liquidity
http://www.tradersmagazine.com/news/103286-1.html?type=printer_friendly
That was a great interview to watch. Yeah, we preach to the choir here but we are not alone out there. This is going to end very badly - VERY BADLY!
It'll be nice to play that clip some day up against the absolute dickweed, rah-rahm cheerleaders Kudlow, Cramer, DK, et.al. video clips.
another "Blank Check" Close of the Day
the orders must be to hold S&P @900 and DOW at a 200 Loss, at ALL/ANY Cost = Blank Check Close
Contact is PhD in maths/physics. Normal guy except has a PhD from arguably number one program in the world. Everyone is trying to hire him even though he wrote the algorithms for a company that went spectacularly bust 5(?) years ago with management now serving prison time. I dont really understand his business. But he can go anywhere in the world and find employment in this field. he tells me that all the high level traders new the cdo's, MBS's etc would go terribly bust; yet they just kept feeding. the party was too good. Goldman Sachs? he tells me that all the traders know that Goldman is stealing billions. Their rational? Goldman IS the TOP of the Food-chain. So thats it. He is neck deep in this programmed trading stuff. He fully admits it is going to burst. Yet he keeps writing the algorithms and they keep trading it. he doesnt work for Citadel, who he says is a huge player along with Simmons, but many of his former colleagues do. Oh and it is mainly in the equites(S@P). No currencies.
I'll bet the name of this contact and some of that email corro is the kind of thing TD's looking for on the SEC Needs Your Feedback thread. (Or in an email related thereto.)
It is interesting that days after this subject matter is discussed a high level Russian Goldman sachs guy is arrested for utilizing Goldman sachhs proprietary trading algorithms. As I wrote earlier, my contact tells me that this is the ONLY way wall street is making money. Without this, the hedge funds and wall street are bust. He can go to any firm with his algorithms and get hired. he tells this will end in a spectacular bust because there the liquidity does not exist for these massive, millisecond trading strategies.
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