After Hours

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.

Big drop in SPY AH to below VWAP. Big blocks pushing lower. What is one missing here?

After an ~20 million cumulative volume shortfall from average until 4:00pm, volume went green for the day in the first two minutes of After Hours traing. In the meantime the SEC continues to do absolutely nothing.

No volume all day? No problem - luckily there is after hours to trade. The entire cumulative volume below average caught up to the normal in less than 30 minutes of AH trading. And guess what - all the volume to the downside. But no big surprise there.

In a replay of yesterday, Morgan Stanley advertised 30 million SPY shares traded at 6:42 pm. Curiously UBS also posted a significant accumulation block, larger than yesterday's, and indicative of some serious Prime Broker activity.

In a replay of yesterday, Morgan Stanley advertised 30 million SPY shares traded at 6:42 pm. Curiously UBS also posted a significant accumulation block, larger than yesterday's, and indicative of some serious Prime Broker activity.