The Inefficient (And Delayed) Market Ramp Explained

Tyler Durden's picture

While little makes sense any more in the New Bizarro Market normal, Dow Jones believes it may have stumbled upon one "reason" for the stung like a bee 11:30 am market ramp. Markets proved once again that they are far from the paragon of efficiency that so many prefer to proclaim - bending their movements to the headline of the day to prove one's point. Today was a perfect example. The mysterious rampapalooza - which talking heads proclaimed must be due to something that means every mom-and-pop should be all-in - seems to be a delayed and reflexive reaction to a erroneous Ohio vote-count that was in favor of Romney. As the chart below shows, the release on Cincinnati.com of 'dummy data' which showed Romney in a surprising lead from early-voting spurred a bond-rally reaction (against consensus implications). Equities and Gold did not react, but soon after it was refuted (as dummy data) bonds 'topped' and as they sold back off to 'new normal' pro-Obama status quo so Stocks and Gold piggy-backed all the way up to pre-NFP levels. Efficiency at its best...Total no news = 10 S&P points

The 'dummy vote' reaction timeline...

 

  • 1045ET data released - bonds rally BUT stocks/gold do not move
  • 1100ET 'dummy data' refuted - bonds still rallying and stocks/gold not impressed
  • 1108ET ZeroHedge tweets confirmation - bonds have momentum
  • 1125ET Market realizes - Bonds reverse quickly and stocks/gold piggy-back
  • 1245ET Markets converge at pre-NFP levels - as if nothing happened - no news (i.e. news refuted) and we hold 10 extra points in the S&P, $20 in Gold, and 4bps in TSYs

 

Of course - ths standard European close ramp is just as likely the reason but efficient it is not...

It does somewhat suggest that the market's consensus view on Bonds reaction to Romney win is incorrect though...

Charts: Bloomberg

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Gubbmint Cheese's picture

Gotta love the hype - a Reuters headline suggested the markets were gapping up because there will be no more uncertainty tomorrow... but still had no idea who was going to win..

 

shakes head.

 

 

slaughterer's picture

Fucking WTI is flying like a psychotic bat out of hell: did Israel bomb Iran or something?

knukles's picture

Level 3 CFA certification:  Markets are efficient.

 

And if that's true why would anybody ever need a CFA charter just to index stocks or trade on Material Non-Public Inside Information. 
Oh... perceptions again...

redpill's picture

Cue some dumbshit on CNBS pulling some scenario out of his ass about the move being the result of "investors bargain hunting"

Stackers's picture

It does somewhat suggest that the market's consensus view on Bonds reaction to Romney win is incorrect though...

 

Rule #1 of trading: The first move is always the wrong move.

malikai's picture

Must be all that Rombium. Note the bizzarre diverg from Friday through Yesterday in WTI. That was treasuries/s&p with a bad case of turrettes.

http://blog.quantsig.net/2012/11/06/crude/

TruthInSunshine's picture

These are The Bernank'd markets.

Good luck muppets.

Schmuck Raker's picture

Bernanke this shit. I'm gonna go get a Bernanken' beer.

Oh, and BERNANKE YOU Bernanke.

Calidreaming's picture

All the markets are a bunch of shit , any small false headlines send markets rallying crazily- while actual true bearish stats only send markets down a little.

this is fucked

Lost Wages's picture

Let the voting algorithms decide. Humans are too irrational.

reading's picture

The algos didn't need to take a break to go to the polls...they just keep on keepin on -- rain, snow, sleet or whatever nothing will keep them back.

HD's picture

Throw in a few number twos and all hell would break loose...

francis_sawyer's picture

That's the Eastern panhandle of West Virginia formation... Must mean something...

Quinvarius's picture

Or maybe Kaminsky just needs an excuse for getting gored by the bull.

HD's picture

You really hate him - he run over your dog or something?

Quinvarius's picture

Anyone who gets on TV and screams sell like his hair is on fire to scare people, after QE3 is announced, the way he did, is deserving of ridicule.  That is about as Cramer as you can get.

RockyRacoon's picture

I used to like Kaminsky but it seems he's too volatile to be of any value.   Just the most trivial event pushes him over the edge.  Not that I have any, but I wouldn't let him manage my money.

sunny's picture

Oh bother.  I think I liked the German "econ bomb" better.  That I can get my head around.  Phoney vote tallies...hell, with Florida being Florida, we could get this shit for another couple of months.

sunny

q99x2's picture

Republicans are using the same team players that they used against Paul. Yeah well look out here comes Roseanne Barr.

the not so mighty maximiza's picture

May the biggest fraud win!!! hahah

Mr Lennon Hendrix's picture

Note to Romney - This is why you should never talk shit about Ben Bernanke, the King of the Universe, Rider of Unicorns, Dreamer of Dreams.

HD's picture

"Rider of Unicorns"... I enjoyed that.

francis_sawyer's picture

Rejoice... I will... when the unicorn 'rides' Bernanke from his 6...

LouisDega's picture

Hehheh hehe he, He said market, he he

images

Dr. Engali's picture

The market ramped because there is going to be money printing from here to eternity.

Kaiser Sousa's picture

there r no markets.....just fraud and manipulation...

enter the casino...

exit with nothing....

Silver i started accumulating many years ago still looks the same as it did back then....
Pretty, and in my hands.....

fucking bankers kiss my ass........ 

jtz5's picture

It doesn't matter who wins, somehow this market will continue to go higher.  If Romney wins, it will be spun as good for business, Wall St, fiscal cliff, etc., so we rally.  If Obama wins, good for continued QE with Bernank, so we rally.  It's all bullshit.

HD's picture

Meanwhile in Europe:  ....tick, tick, tick...BOOM

FoeHammer's picture

Where's the love for Japan?! Cmon, a watched pot never boils.

LongSoupLine's picture

like i said...fade this fucking crooked pig.  its one big fucking trap on low volume.

Randy Goodnight's picture

 "Equities and Gold did not react . . "

Really? - Gold up $30 -Can't wait until it does react . . .  Bitchez (I believe is the correct term)

ekm's picture

It is simply a delusional hope from Primary Dealers trading desks that any possible suckers could still be left in the market like pensioners, retail or bonafide speculators. It's got nothing to do with elections.

 

They'll do a ramp up over and over and over and over and over and over with one and one and one goal only:

HOPE FOR SUCKERS TO ARRIVE.

 

1 or more primary dealers are so deep in shit (stocks) that the only choice they have it to buy, buy, buy and only buy.

 

Thus there are only two options left regardless of who wins the elections:

1) Market moving up on low volume or ramp ups like this

2) 2000 dow points collapse a day for 5 days in a row.

 

Reason: There are no buyers and 1 or more primary dealers have a lot of rotten tomatoes (stocks) to throw away.

Dr. Engali's picture

George Carlin on the illusion of choice...

http://www.lewrockwell.com/blog/lewrw/archives/125491.html?utm_medium=twitter&utm_source=twitterfeed

 

Where ever you are rest in peace.

 

Hohum's picture

Angry white men,

Market is up because it's going to be Obama and Ben remains in charge.  Isn't Ben the one that drives the stock market?  Many here have said so.

SheepDog-One's picture

Market is 'up' to where its been 5 times in the last few months? Gee celebrate.

Grand Supercycle's picture

OBAMA WINS.

Prediction Markets Decided For Obama Months Ago...

http://stks.co/gESo

Tombstone's picture

What actually happened was that Benny recalled money from the banks because they are not lending it out and used those funds to BUY, BUY, BUY based on Krammer spouting off about the Obummer being re-elected.  Socialists have to stick together, ya know.

SheepDog-One's picture

So at best we're totaly screwed so good news. OK, got it.

ekm's picture

IMO any news is irrelevant. Whoever gets elected is irrelevant as far as stock market is concerned.

 

This is deep despair from 'suckering desks' of primary dealers. A lot of them have been fired so far and a lot more are about to be fired.

 

lemarche's picture

it did make sense for traders using technical analysis, and therefore also to robots who use the same rules, even tho probably carried to an extreme...

slaughterer's picture

Tyler, just tell us when to start shorting, and we will be OK again.  

Rathmullan's picture

rogue-bot market where what little human input there is gets heavily influenced by cocaine, stoli and LCD soundsytsem.

infiniti's picture

"bonds 'topped' and as they sold back off to 'new normal'"    

 

BS. That move in bonds was 2 basis points. Something else moved the mkts, it's just not clear what it was.

Scalaris's picture

No news = best news ever, and as for the hindsight market "experts", who claim the pre-dump-pump is due to Romney/Obama lead = fuck every single one of them who becomes an expert after the fact by ascribing any fatuous vagueness for whatever bot-driven dark pool-frontrunning, in this charade of a market.

And fuck whoever pumped crude to today's vertexes, just because the drone-like populace throws pieces of paper at its illusroy choice. 

jim249's picture

This is nothing more than Ben and his friends on WS pumping the markets to squeeze out any more Obama votes they can muster. The markets will be down Wed.

Thought criminal's picture

Don't get it, how is Romney better for markets than Obama? If Romney said he would replace Bernanke, then this should be bad news for the markets. If Romney adopted any kind of austerity, it would mean a deflation wave surely not favorable for stocks.