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A Three-Month Flat Market? Yes...If You Exclude The Constant After Hours Manipulation
Anyone looking at their 401(k) portfolio performance since the end of August will undoubtedly be very happy (and extremely surprised), as the market has climbed steadily higher despite i) increasingly declining trading volume and ii) consistent and material withdrawals from domestic equity mutual funds. Furthermore, if anyone was merely looking at the trading action in regular hours, one would think there was absolutely no profit made since early September. The reason for that: all the upside since September 14th has come exclusively from after hours action. The chart below demonstrates the relative performance of regular hour trading in the SPY as well as that in the extended session. The notable observations: gaps, gaps, gaps. Every single day, minimal volume pushes the futures index higher. Good news, bad news, it don't matter to the Goldman S&P and Russell 1000 futures desk: they just lift every micro offer, giving the impression that the market is unstoppable, often leapfrogging each other as the latest viagra'ed GDP or unemployment rumor is spread. Come morning, it is time for the HFT brigade to come in and scalp their trillions of pennies while leaving the market unchanged, then at 4pm handing it off again to leveraged futures manipulation and dark pools. In a nutshell, this is the secret of the past quarter's phenomenal market performance.
A longer-term chart highlights the regime changes since the March lows, when for several months in a row, regular hours would carry the broader market higher, then would flatline, and let the futures trading desks take over. Rinse. Repeat. That way both the HFTs and dark pools end up happy.
The observant among you will immediately realize what this implies: not only is there no volume breadth to the recent move in the markets, but the actual push higher likely occurs on at most tens of thousands of futures contracts on a daily/weekly basis. The fact that literally several blocks of AH trades, used persistently, can move the market higher by 6% over the past 3 months, even as regular trading accounts for absolutely no part of this move, and that the SEC finds nothing troubling about this phenomenon, should be sufficiently telling about how "efficient" US markets have become.
The reason for this focus away from regular hours trading is simple: all After Hours does is provide leverage due to the much shallower trading overnight. Zero Hedge is currently finalizing ES volume data to determine just what leverage the futures desk as JPM and Goldman uses in their interminable push to make the Dow 36,000, working title of "EV/EBITDA = Infinity (Or Better Yet, Negative)? Who Gives A Shit: The Fed Has You Covered", the bestseller it was always meant to be.
chart h/t CreditTrader
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It's such a ridiculous fraud, the sector indexes have
stopped participating.
All you guys loving Ron Paul
Doesn't anyone care about his past views on race and social policy?
Today, Grover Norquist and I are calling for an investigation into Rahm Emanuel’s activities at Freddie Mac, and the White House’s blocking of an Inspector General who would look into it. The letter follows:
December 23, 2009
Attorney General of the United States of America
U.S. Department of Justice
950 Pennsylvania Avenue, NW
Washington, DC 20530-0001
Dear Attorney General Holder:
We write to demand an immediate investigation into the activities of White House Chief of Staff Rahm Emanuel. We believe there is an abundant public record which establishes that the actions of the White House have blocked any investigation into his activities while on the board of Freddie Mac from 2000-2001, and facilitated the cover up of potential malfeasance until the 10-year statute of limitations has run out.
The purpose of this letter is to connect the dots to establish both the conduct of Mr. Emanuel and those working with him to thwart inquiry, and to support your acting speedily so that the statute of limitations does not run out before the Justice Department is able to empanel a grand jury.
--snip
We recognize that these are extremely serious accusations, but the stonewalling by Mr. Emanuel and the White House has left us with no other redress. A 2003 report by Freddie Mac’s regulator indicated that Freddie Mac executives had informed the board of their intention to misstate the earnings to insure their own bonuses during the time Mr. Emanuel was a director. But the White House refused to comply with a Freedom of Information Act request from the Chicago Tribune for those board minutes on the grounds that Freddie Mac was a “commercial” entity, even though it was wholly owned by the government at the time the request was made.
--Continues at link
http://firedoglake.com/2009/12/23/jane-hamsher-grover-norquist-call-for-...
Edit: Sorry meant to post it in another thread. Will leave it here since it is already.
Happy to see someone else finally picked up on this. Something I noticed and mentioned in a couple of my anonymous post over the past few months. Thanks, Great charts and post.
PAY NO ATTENTION TO THE 6 MEN IN RESTON
http://zerohedge.blogspot.com/2009/04/visible-hand.html
maybe there are no sellers because everyone "knows" it's gonna go up...
US futures are a mean to manipulate emerging markets such as Brazil, which opens up some hours before the US...
There are two types of gaps in general, continuity gaps and exhaustion gaps...This year we've seen alot of both, and it's been a normal occurance since that China stamp tax in 2007... Since then most brazilians pay attention to Asian markets and US futures overnight.
Also, don't forget europeans...
Overnight trading in general accounts for 1 hour of a regular day at the Dow or S&P500...
Think about it, in 1 hour many things can occur... I think volatility in US futures is fair... It just goes with the trend.
I'm heavily short all markets, very bearish, yet despite US futures rising overnight everyday, I know that when and if markets trends back to that devastatory state of 2008, US futures will FALL everyday and then the buyers that will be moaning.
You see I'm a man of faith.
I watch it daily. Open on the up where the high for the day happens within 30 minutes of the open,then it falls some, lays there like a dead fish for 4.5 hours then they jam the close to make it appear like they had a nice day. Rarely do they jam the close and not move the open the next day higher,most often to another open on the up. Clearly the buy at the close and the open on the up are connected. A few million spent on futures moves the market a few billion and they liquidate themselves out of the futures and the stock bought on the close during the first 30 minutes.
Is there a way to buy VIX spot, something like that?
I'd gladly stock up on that..
VXX, VXZ...
No one has mentioned the role of the foreign markets. In my opinion, the overnight gains in Asia and Europe are what's largely driving the overnight trading in the es futures.
he should've put the close-to-close performance on those charts so that we could make an apple-to-apple comparison! LOL
This blog post is so f'ing stupid. Doesn't he know futures move the market as they represent shares of the underlying indexes? Does he not understand that the u.s. market is connected to foreign exchange as well as other global markets? Stocks have been making most of their gains overnight for at least the last 20 years. I hate scare monger bs like this. Nothing is wrong here, the market is acting like it always does. The main thing to take away is that there are a lot of overseas markets buying up US stocks and they do they overnight through futures. Big deal. Yaaaawwwn.
For this to mean anything, we'd have to have more data. I remember reading most of the multi-year bull move before the housing crash happened on gap ups over night.
This phenomenon is not new.
http://www.tradingmarkets.com/.site/stocks/commentary/lcbattlep/05272005...
"We went back to 1993 and looked at the SPYs since they first started trading. From 1993 - May 20 2005, the SPYs have risen from just above $43 per share to just above $119 for a total of approximately 76 points.
If one had bought the SPYs on the close over the past 12 years and sold them on the next day's open, they would have made 143 SPY points (plus, they would have also received all the quarterly dividends). And had one bought the SPYs on the open each day and sold the position on the close, how would they have done? They would have lost money! How much? A little more than 67 points. Yes, in spite of a solid upward move in SPY prices, the intraday move--on a net basis--was negative! All the gains, and a great deal more, came from holding the SPYs overnight. And then a good chunk of these gains were lost while the market was open.
[From] 1993 - May 2005, the gains have occurred while the market has been closed, not while it has been open."
ie Amateurs buy the open;
Pro's buy the close...
http://www.jubileeprosperity.com/
This post probably wont get seen way down here but ive got to say this thread is a real high point for ZH site. It really sums up the diversity of frustration and ideas with "the system". I feel no, we cant change the plutocracy because in the end everyone (in charge) sells out to the almighty dollar in some way and everyone from illegal aliens to presidents battle over the righteousness of their claim to society against the entitlement of those that control the money.If we don't change the term limit laws status quo is just a private country club and we are the hired help.
Democracy? right....Name one politician that has changed anything in the past 30 years that would overrule the Creature from Jekyll Island.
Here's a link to a Daily Bell article by Hultsberg that lays bare the FED in a few hundred words, though all would benefit from Griffin's "The Creature From Jekyll Island."
http://www.thedailybell.com/681/Nelson-Hultberg-The-Fed-is-a-Fascist-Cartel.html
If you are still playing in the stacked deck market, may you enoy the best of luck.
A better buy is gold and silver at current fire sale prices; find another way to make honest money with your still intact wits. I believe hyperinflation is baked in the cake, it has only to be cut and served on cold plates.
The laws of supply and demand simply cannot account for the chart pattern in SPY over the past month. The market has tried to sell off repeatedly only to be re-inflated after hours when no one is looking.
Obama and his cronies have ruined the market and they're on their way to ruining the country. This is what happens when you elect a 'community organizer' with no experience to be President during a depression. Lies and misinformation.
Apologies in advance for the lengthy post but I believe this is an important topic. I have stopped trading any US markets as a result of my observations. I don't for one minute believe that my paltry trades will make any difference but I'm sure I’m not alone in reaching the same conclusions and deciding that the US markets are just too rigged to bother with.
I have traded the Globex markets from the UK for about 10 years. The early years were fine but here's what I have observed recently.
I believe that there are now orders on the book that the CME are allowing to be hidden. I draw this conclusion because sometimes when I place a Limit order at the market - but where there is zero size on the other side - I am often filled instantly but the size still shows zero.
At first, I assumed it was a coincidence that the exact same size appeared on the Bid/Ask at exactly the same time to fill my order.
But it began to happen just a little too often for coincidence to explain it. So, I placed my 5 lot in singles instead and every one of the orders did the same thing i.e. each got filled but the opposite size always remained at zero.
While it is possible to place a large order on Globex and then elect to only release a fixed number of contracts to the book at a time, I do not believe there is any legitimate way to have orders on the book and not have ANY of them showing. If this has changed, perhaps someone could point me to some CME info as to when this change was implemented.
Another result, which I have also experienced and which also points to hidden orders, is when I am at or near the top of the queue at a price on the book (very easy to see in the overnight market). Sometimes, I do not get filled even though trades take place at my price. As Globex claims to operate a FIFO system (First In, First Out), I should always get filled first when I'm shown as the only size at that price. This again suggests that there are hidden orders - and that they are ahead of mine in the queue. Either that or certain participants are being allowed to jump the queue. I think the former is more likely.
Finally, just to show how much the 'bots' are distorting the market.... Ahead of a report, it has always been normal for traders to pull their orders from the book. This has always been a gradual process but it was always a process rather than an event. Now, (using NQ as the best example), you might see between 20 and 100 cars at each price level on the book and then a point will come where the sizes drop dramatically but instantly across ALL price levels. Only a bot could do that in such a synchronised fashion and I believe it also shows how thin but controlled these markets really are.
You do not see some orders because the other side my be submitting and pulling them so fast your visual display will not update fast enough to show you the orders. Even if your visual display could show you this information it would be worthless as your brain would not be able to process the number because it would appear and disappear so fast.
As far as Globex is concerned, NOT ALL MARKETS ARE FIFO! Some have fill algos based on size, timing and customer status. I trade treasuries and fills in the ZT are allocated using a none FIFO system. In the past some customers use to "fluff" orders, send larger orders than desired and use a program to pull the order once the desired size was filled, to get fill advantages. But these guys often get buried by large guys who from time to time rip through the fluff orders, fill the fluffers on far too much size and squeeze them till they puke the positon.
Anyhow, while these fill algos do suck and favor big customers, they are not as bad as the Brokertec market up that occurs in the treasury cash markets during large market moves. These allow favored customers to get filled on everything at a desired price before anyone else does causing one to miss an offer or a bid and have to pay up or down, sometimes by several ticks!
Hope that was helpful.
RPB
Apologies in advance for the lengthy post but I believe this is an important topic. I have stopped trading any US markets as a result of my observations. I don't for one minute believe that my paltry trades will make any difference but I'm sure I’m not alone in reaching the same conclusions and deciding that the US emini markets are just too rigged to bother with.
I have traded the Globex markets from the UK for about 10 years. The early years were fine but here's what I have observed recently.
I believe that there are now orders on the book that the CME are allowing to be hidden. I draw this conclusion because sometimes when I place a Limit order at the market - but where there is zero size on the other side - I am often filled instantly but the size still shows zero.
At first, I assumed it was a coincidence that the exact same size appeared on the Bid/Ask at exactly the same time to fill my order.
But it began to happen just a little too often for coincidence to explain it. So, I placed my 5 lot in singles instead and every one of the orders did the same thing i.e. each got filled but the opposite size always remained at zero.
While it is possible to place a large order on Globex and then elect to only release a fixed number of contracts to the book at a time, I do not believe there is any legitimate way to have orders on the book and not have ANY of them showing. If this has changed, perhaps someone could point me to some CME info as to when this change was implemented.
Another result, which I have also experienced and which also points to hidden orders, is when I am at or near the top of the queue at a price on the book (very easy to see in the overnight market). Sometimes, I do not get filled even though trades take place at my price. As Globex claims to operate a FIFO system (First In, First Out), I should always get filled first when I'm shown as the only size at that price. This again suggests that there are hidden orders - and that they are ahead of mine in the queue. Either that or certain participants are being allowed to jump the queue. I think the former is more likely.
Finally, just to show how much the 'bots' are distorting the market.... Ahead of a report, it has always been normal for traders to pull their orders from the book. This has always been a gradual process but it was always a process rather than an event. Now, (using NQ as the best example), you might see between 20 and 100 cars at each price level on the book and then a point will come where the sizes drop dramatically but instantly across ALL price levels. Only a bot could do that in such a synchronised fashion and I believe it also shows how thin but controlled these markets really are.
I stopped trading as well. I suspect a
lot of people have.
Stop trading? Something to think about....people forget
that the market is just a mechanical beast and one
is not guaranteed it will open at the previous day's
level. One of these days, these incompetent jackasses
will be forced to open 'er down 1000 Dow points which
they'll attribute to god knows what. Much of market history is composed of periodic insane trading and ensuing
apologies: "Gee, none of us thought THAT THAT could happen"
Volume has migrated to the Dark Pools...
@Sancho Ponzi (and ZH)
Can you name one valid reason for having started this thread with a completely irrelevant political post? It had nothing to do with market manipulation. Your intention was clearly to draw away readers from the underlying message in the ZH article, that markets are being manipulated via futures and/or ETF's. I urge ZH to remove the first 40-50 replies that were initiated here by Mr. Sancho in a blatant attempt to filibuster this topic away.
40 non corporate senators and 60 corporate senators, the trick is to get 20 non- corporate senators elected,
from the existing group of 60 corporate senators. With the the internet , it's do-able. ( need $$$ )
Just keep in mind though, The other guy(corporate)is going to use
" BOLD FACED LIES", so that's the level of
attack you will have to be on, to get the corporate senators out of office.
Being a lover and not a fighter, have pulled the plug on Peter Schiff.
http://www.youtube.com/watch?v=73vVEY8zNCE
Tyler, You'd have to compare what you describe to the longer term pattern to know whether it's an anomaly. I read somewhere that this has been the pattern for a really long time.
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