New York Stock Exchange
You don't really expect to see huge spikes in large ($1 billion plus AUM) bond funds absent some significant fixed income news (or perhaps, internal scandal). So what's going on with the PIMCO High Income Fund (NYSE:PHK) today?
Update: Volatility study added.
Update #2: It appears a Zero Hedge post back in March may solve the mystery of the tactical nuking of PHK. We are beginning to suspect a bit of naughtiness in the form of insider trading.
Today's market action was rather uneventful, however "lazy" days like today can often provide highly accurate and effective trading signals as a direct result of price immobility within narrow ranges. With a practical knowledge / understanding of technical analysis, one can utilize such signals to profitably scalp futures, stocks and ETFs with ease.
Not even Christmas is safe from cost cutting, or so it seems when comparing this year's New York Stock Exchange Christmas dress-up to last year...
Another harried day where the dollar sells off and the robots immediately start buying anything and everything associated with "risk". Anxiety is building. Many hedge fund managers have already cashed out having "made their year", and are now sitting on a Caribbean beach somewhere. Other more enterprising, hungrier gamers are hunkered down in snowstorms staring bug-eyed at the screens trying to get a jump on the "hot trade" for 2010.
- GM is reportedly looking at "all offers" for Saab. (Apparently only unrealistic offers have been entertained hitherto). [dow jones]
- Dutch automaker Spyker: "Hey, we'll bid." GM: "Anyone... anyone at all? Bueller...? Bueller...?" [marketwatch]
- China's Zhu Min: "The world does not have so much money to buy more US Treasuries." (Current account woes. Who knew?) [shanghi daily via drudge]
- Iranian troops lower flag and withdraw from Iraqi claimed oil well. (Iranian theft of U.S. egg nog shipment to troops suspected). [reuters]
- In Russia, judo throws you. (Do not fuck with judo black belt Putin. Period.) [reuters]
With the role of HFT in stocks being actively investigated thanks to Senator Kaufman's ongoing crusade against a two-tiered market, the spotlight has shifted toward High Frequency Trading strategies in options, where now the exchanges themselves are evaluating whether HFT traders are benefiting from their two-tiered role as both a preferential customer and a market maker, however one, having no obligations to create a market, when things turn ugly. A report by Dow Jones titled "Influx Of High-Frequency Traders Prompt New Rules In Options" notes that "options exchanges are drafting new policies to address the ever-expanding role of high-frequency traders in their markets. The policies aim to eliminate some of the advantages that high-frequency traders currently have over professional options market-makers, representing an attempt by the exchanges to level the playing field between these two huge players in the options market and to maintain the orderly functioning of the market." As more transparency is shone on every market dominated by this now-pervasive paradigm, especially with regulators woefully behind the curve, the latest development in the ongoing unmasking of various HFT strategies will only benefit the broader markets.
Thank god for that secondary, or else there would be no volume in the market today. No, seriously. Courtesy of the biggest and most botched secondary offering in history (you are welcome overpaid Citi bonus recipients), and thanks to Goldman et al buying up every share that has a $3.1x handle (we'll see how long that continues: after all someone has been loading up on Citi CDS to the gills) Citi accounts for 47% of all NYSE volume. Add the other fins, and the HFT are running straight out of luck. Watch for the cannibalization among the high frequency scalpers to start in earnest very soon.
A useful chart from Themis Trading presents the exponential jump in stock volume since the adoption of Reg NMS and the appearance of various ECN/ATS middlemen, whose primary goal in life is to scalp spread... sorry, provide liquidity to an extent never seen prior to 2007. It is these very organizations, and the scores of micro traders who make money only courtesy of the resultant increased daily speculation and momentum escalation, that are now screaming about the implications of what proposed Reg NMS 2 would do to their top and bottom line, for obvious reasons. The explosion in volume of course is notsynonymous with an increase in liquidity, unless one counts the "huge" benefit that one gets by trading Citi in 20 different exchanges (Citi alone accounted for 20% of NYSE volume today). The "strange attractor" of HFT, in which a HFT dominated stock attracts more HFTstrategies with the flip of a switch, is the only "benefit" of magnified "liquidity", while the threat of massive systemic imbalance as every single trader jumps on the same side of the trade, as highlighted recently by traders such as Wilmott and many others, continues growing ever larger. It is time to take the market back from all these various tolling operations which provide absolutely no real benefits to the market.
One of the screens that we at Fibozachi continually monitor throughout the Cash session (09:30 - 16:00) is the NYSE TICK.
The hackneyed cliche of "volume precedes price" is certainly true more often than not, however, it is far from foolproof. We prefer to modify this tired cliche by saying that: "buying and selling pressure precedes price."
The snapshots included (from today's session) clearly illustrate how this critical relationship (between the TICK and price action itself) plays out on a daily basis.
Unable to find any compelling valuations among US bank stocks I have taken my search north of the border to find the best of the Canadian banks. Based on my initial research that bank is Toronto-Dominion Bank (NYSE: TD). While it may not be a buy at the current levels, this is certainly a stock to keep an eye on if this incredible market rally ever reverses.
Someone is making big bucks on the continuing Dubai story. I wonder who that might be.
The Proposal That Has Dark Pools Sweating; The Dark Pool Vs. HFT Scramble Is About To Enter Round TwoSubmitted by Tyler Durden on 12/11/2009 18:11 -0500
Dark pool operators, who have quietly been redirecting shady order flow via dark pools of "liquidity" with minimal supervision and below the radar for many years, are getting spooked by a proposed SEC rule which would have these same dark pools identifying their trades in real time, thus removing the benefits associated with what is effectively an OTC equities market. Their response: blame it all on the HFT guys, who use the information that would leak to front-run the crap out of the "long-onlies." Yet weren't these same HFTs claiming just yesterday that all they do is provide liquidity and tighten spreads? ... Someone is lying.
"While the rest of the country suffers, this stock market is booming." Note the not-so-High Frequency Trader counting the trade tickets.
Is The Goldman Exodus About To Start? Firm Announces Management Committee To Get 5 Year Vesting "Shares At Risk" With ClawbacksSubmitted by Tyler Durden on 12/10/2009 12:00 -0500
Just released: the latest Mea Culpa from 85 Broad. Goldman's "entire 30-person management committee, which comprises all global divisional and regional leadership, will receive 100 percent of their discretionary compensation in the form of Shares at Risk, which are subject to restrictions for five years. Discretionary compensation represents the vast majority of senior management's compensation and is directly tied to the firm's overall performance. "
- Asian shares were mostly lower Thursday as continued risk aversion hurt demand.
- Australian employers add 31,200 jobs, six times estimates; currency gains.
- Australia's jobless rate unexpectedly falls to 5.7 percent in November.
- Bank of Korea keeps key interest rate at record low at 2% as economy recovers.
- China puts squeeze on property speculators with tougher sales tax penalty.
- China says US, Russia dumped electrical steel.
- Climbing yen, economy concerns sends Japan stocks lower; Nikkei loses 1.4 percent.