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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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Tue, 11/06/2012 - 14:55 | 2952606 Gubbmint Cheese
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.

 

 

Tue, 11/06/2012 - 14:57 | 2952620 slaughterer
slaughterer's picture

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

Tue, 11/06/2012 - 15:04 | 2952637 knukles
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...

Tue, 11/06/2012 - 15:13 | 2952683 redpill
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"

Tue, 11/06/2012 - 15:01 | 2952638 Stackers
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.

Tue, 11/06/2012 - 15:25 | 2952710 malikai
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/

Tue, 11/06/2012 - 14:54 | 2952608 TruthInSunshine
TruthInSunshine's picture

These are The Bernank'd markets.

Good luck muppets.

Tue, 11/06/2012 - 15:17 | 2952692 Schmuck Raker
Schmuck Raker's picture

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

Oh, and BERNANKE YOU Bernanke.

Tue, 11/06/2012 - 16:14 | 2952953 fuu
fuu's picture

Bernanke-A man!

Tue, 11/06/2012 - 14:56 | 2952610 Calidreaming
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

Tue, 11/06/2012 - 14:56 | 2952611 Lost Wages
Lost Wages's picture

Let the voting algorithms decide. Humans are too irrational.

Tue, 11/06/2012 - 15:03 | 2952644 reading
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.

Tue, 11/06/2012 - 15:12 | 2952677 HD
HD's picture

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

Tue, 11/06/2012 - 14:55 | 2952612 francis_sawyer
francis_sawyer's picture

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

Tue, 11/06/2012 - 14:55 | 2952613 Quinvarius
Quinvarius's picture

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

Tue, 11/06/2012 - 15:14 | 2952681 HD
HD's picture

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

Tue, 11/06/2012 - 16:00 | 2952896 Quinvarius
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.

Tue, 11/06/2012 - 16:23 | 2952992 RockyRacoon
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.

Tue, 11/06/2012 - 14:57 | 2952619 sunny
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

Tue, 11/06/2012 - 14:57 | 2952623 q99x2
q99x2's picture

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

Tue, 11/06/2012 - 14:59 | 2952627 the not so migh...
the not so mighty maximiza's picture

May the biggest fraud win!!! hahah

Tue, 11/06/2012 - 15:04 | 2952634 Mr Lennon Hendrix
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.

Tue, 11/06/2012 - 15:05 | 2952657 HD
HD's picture

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

Tue, 11/06/2012 - 15:26 | 2952721 francis_sawyer
francis_sawyer's picture

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

Tue, 11/06/2012 - 15:30 | 2952635 LouisDega
LouisDega's picture

Hehheh hehe he, He said market, he he

images

Tue, 11/06/2012 - 15:02 | 2952640 Dr. Engali
Dr. Engali's picture

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

Tue, 11/06/2012 - 15:06 | 2952659 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

That was never in question.

Tue, 11/06/2012 - 15:08 | 2952665 Dr. Engali
Dr. Engali's picture

Exactly.

Tue, 11/06/2012 - 15:02 | 2952645 Kaiser Sousa
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........ 

Tue, 11/06/2012 - 15:05 | 2952652 jtz5
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.

Tue, 11/06/2012 - 15:15 | 2952687 HD
HD's picture

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

Tue, 11/06/2012 - 22:33 | 2953918 FoeHammer
FoeHammer's picture

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

Tue, 11/06/2012 - 15:04 | 2952653 LongSoupLine
LongSoupLine's picture

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

Tue, 11/06/2012 - 15:15 | 2952689 Randy Goodnight
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)

Tue, 11/06/2012 - 15:24 | 2952690 ekm
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.

Tue, 11/06/2012 - 15:23 | 2952707 Dr. Engali
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.

 

Tue, 11/06/2012 - 15:26 | 2952720 malikai
Tue, 11/06/2012 - 15:27 | 2952728 Hohum
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.

Tue, 11/06/2012 - 15:37 | 2952770 SheepDog-One
SheepDog-One's picture

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

Tue, 11/06/2012 - 15:33 | 2952743 Grand Supercycle
Grand Supercycle's picture

OBAMA WINS.

Prediction Markets Decided For Obama Months Ago...

http://stks.co/gESo

Tue, 11/06/2012 - 15:38 | 2952778 Tombstone
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.

Tue, 11/06/2012 - 15:39 | 2952781 SheepDog-One
SheepDog-One's picture

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

Tue, 11/06/2012 - 16:02 | 2952898 ekm
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.

 

Tue, 11/06/2012 - 15:39 | 2952782 lemarche
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...

Tue, 11/06/2012 - 15:43 | 2952796 slaughterer
slaughterer's picture

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

Tue, 11/06/2012 - 15:50 | 2952832 Rathmullan
Rathmullan's picture

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

Tue, 11/06/2012 - 15:52 | 2952848 infiniti
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.

Tue, 11/06/2012 - 15:55 | 2952867 Scalaris
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. 

Tue, 11/06/2012 - 15:59 | 2952883 jim249
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.

Tue, 11/06/2012 - 16:01 | 2952897 Thought criminal
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.

Tue, 11/06/2012 - 16:37 | 2953033 Clowns on Acid
Clowns on Acid's picture

Yo Thought Crim - your above analysis is simplistic. Replace Bernanke, adopt Fed spending austerity, lower tax rates, repeal ObamaCare, allow cUS companies to repatriate their overseas profits w/o double taxation (which currently exists).

Mkts will see that the $$ are being put into the hands of individuals rather than Federal czars and crony Solyndra like projects.
All the liquidity in the system now is trapped in the banks. A clear economic plan would free that capital to the private (vs public or crony) business.
Rates would probably rise, but in response to an inflation threat given the surge of $$ into private hands.
Yes, higher rates would clip housing (but that market is still way over priced).
In a nut shell, Romney's policies would bring equilibrium back to money markets, eventually. And thats all that the market needs.
Obama and Bernanke have been complete and udder failures.
Oh yeh..one other thing Fuck you Benranke! Fuck you MSM!

Tue, 11/06/2012 - 16:22 | 2952986 Shizzmoney
Shizzmoney's picture

For those keeping score.....Here's how the stock market has fared in other recent election days:

  • Nov. 6, 1984: Hours before Ronald Reagan beats Walter Mondale in a landslide for re-election, and with the economy healing after a deep recession, the Dow climbs 14 points to 1,244.
  • Nov. 8, 1988: The market enjoys a strong morning in anticipation of a victory by George Bush over Michael Dukakis. It holds only a fraction of the gain, and the Dow ends up two points at 2,127.
  • Nov. 3, 1992: An uneventful session one day after a rally based in part on speculation that a Bill Clinton presidency wouldn't hurt the markets. The Dow ends down nine points at 3,252.
  • Nov. 5, 1996: In the middle of a historic bull market, investors embrace hope that Democrat Clinton and a Republican Congress will keep each other in check. The Dow rises 39 to 6,081, within 13 points of its all-time high.
  • Nov. 7, 2000: George W. Bush and Al Gore go to the wire, and investors hold their bets. The Dow closes down 25 points at 10,952. The Dow slides as much as 5 percent during the five-week fight over the Florida vote.
  • Nov. 2, 2004: After a five-day winning streak, the market confronts the prospect that the race between George W. Bush and John Kerry won't be settled on Election Night. Late selling pushes the Dow down 18 points to 10,035.
Tue, 11/06/2012 - 18:46 | 2953401 Orly
Orly's picture

So it's pretty random, in other words.

Tue, 11/06/2012 - 17:45 | 2953263 Bansters-in-my-...
Bansters-in-my- feces's picture

........................ESF........

Tue, 11/06/2012 - 18:28 | 2953362 Yen Cross
Yen Cross's picture

    I can't wait to see the European markets later. The economic news last night was horrific! But hey Spain and Italy printed good "tier2" PMI numbers. No need to pay attention to that [-3.3%] German factory order miss, and that every other statistic was in the red.

     No need to pay attention to Greece about to blow up , or funding problems for Spain, and soon to be [Italy& France], which will no doubt inflame the populations of both countries. No need to worry about shitty Q-3earnings numbers, and Q-4 downward revenue guidance revisions.

      It's all good, because soon we will have a new King in NARNIA... (or maybe not...)

 

 

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