This page has been archived and commenting is disabled.
Autopsy Of A Dead Market
It will come as no surprise that the US equity market this week has been bought on every dip but a glance at the following chart must leave one asking the question - who (or what) is buying? The huge volumes that the market has seen when selling occurs dwarves the miniscule (mostly after-hours) volume that occurs during the ramps. Of course, the slow drift higher is evident also - as $85bn a month spills out day after day. Meanwhile Treasury bonds have handily outperformed since the 3/15 Cyprus headlines hit - 10Y up 1.25% against unchanged for the S&P 500.
The lower pane shows volume - adjusted for average (so green is above average and red is below average)... the dip-buying pattern is clear but who is buying the dip apart from the algos (who use many small orders to tickle around the bid-offer stack)
as Bonds have handily outperformed but stocks don't care...
Charts: Bloomberg
»
- 16961 reads
- Printer-friendly version
- Send to friend
- advertisements -
bondzzzz make her dance
Question for the Tylers:
Is the average volume used in the chart above the average "for a given time interval" or is it simply a running average over a very long period of time.
In other words, are you taking the average volume from 9:30 to 10:00 am EST (or whatever interval you are using) and then taking an average of that interval over many days?
The article says average volume, but it looks like absolute raw volume, or some derivative thereof, about a 0 line pivot for better contrast.
Tyler said; "The lower pane shows volume - adjusted for average (so green is above average and red is below average)"
My question is whether that average is an average of a given INTERVAL over many days, or simply a running average of volume over a very long period.
OK, gotcha. Either should show a similar result.
No, the the difference between the two algorithms is substantial.
Lets say that the the long-term running average is 1000. Then the volume at the open of the normal session will be HUGE - on the order of 10,000 or moar. But more importantly, in this scenario, an unusually high volume print for a given interval that is normally quite won't even show on the chart.
On the other hand if the average is segregated for a given interval (averaged over many days AND repeated for each interval), then an unusually high volume for a quite period will result in a large print on the chart.
This is sometimes referred to as "normalizing."
And sometime it's called, COINS BITCHES!
U.S. markets are officially dead! Long live U.S. markets!
Oil will have the last laugh...and food when drought 2013 hits
A drought is coming?
http://droughtmonitor.unl.edu/
Thats a good part of the corn belt... ugly
You can tell Bernanke & Gang are in total desperation mode to keep Bernanke's "Virtuous Circle" monetary/macroeconomic/psychological/behavior modification/sociological/marketing/telemarketing/as-seen-on-TV policy from burning to the ground, because every fukkin' Fed Reserve POS is out talking up the QEinfinity x 2 today.
If the equity markets in the U.S. crash, it's light out-night night. They will expend every last round of ammo to prop this bitch up, at least trying to keep it from caving in.
Ben "Modern Money Mechanics Economic Foundation" Bernanke, pimp hand still in play (for now):
03-27 14:45: Fed's Evans says Fed most likely to need to continue asset...
what's the difference between a virtuous circle and a viperous cycle?
I don't think there is one. And they both end up consuming themselves.
Why is the man who invests all your money called a broker?
cause he makes you broker.....
I down-voted because the question was rhetorical
i upvoted myself because your down vote was rhetorical....
"Investing".... How do you invest without price discovery in the "Market"?
Fed decides what prices "should be" and if there are no buyers at that price the Fed does the buying for the "Market". This makes "the Market" reflect what the Fed wants the outcome to be. Thats great unless you are one of hundreds of millions of people that can't or won't participate in the scheme.
But isnt this proof of a hollow market that has essentially only one buyer?
What happens when that buyer walks away (voluntarily or by Congressional demand)?
Collapse?
As if we needed more proof that 'Tyler' is missing out on this rally. Cherry picking data.
The use of the word "market" in any title is laughable. 85 billion per month, indefinitely... There is no fucking market for true price discovery.
Still can't get over that...$85 billion per month, pumped into European banks with US branches, and talking it up like it isn't theft or a perversion of the entire "market", or perpetual bailout...and claiming it will lead to jobs in the US.
Look...The Fed is literally ripping off every American in this country...getting right down in his face about it, too. And what happens? The DHS buys 2.5 billion rounds of ammo, and the DOJ contemplates drone assassination for troublesome Americans. And they call the folks who speak of the Rothchilds tin hatters.
Quick...open up 10,000 more HFT based hedge funds...and recovery will at last be to hand!
I don't think the fed will admit that they are wrong until they own most of XOM/IBM and the other key stocks that they use to push the dow higher. At some point I guess the peeps will revolt and nationalize these companies since we already own them through the fed via primary dealer levitation operations... and then split the proceeds up amongst SSI retirees who will otherwise be eating mud cookies because their not going to get dick if BB and his thug bros keep this up. Since we can hardly call what we have now capitalism we might as well turn it around and fuck them right back in the ass with their tricks.
I have a question about the $85 B. If the the fed is buying treasury bonds how is this a gift to the banks? I realize that it would have an elevating effect on price through the unnatural demand but the banks would have had to buy them to sell them to the fed wouldn't they? I don't know much about these things but isn't this just trading a tier 1 asset for cash? I have no questions about the mbs part. I understand how the banks are being gifted there. If someone could answer this I would be very grateful. The excess reserves have puzzled me for quite some time.
JAmie Dimon can answer that, He got to sell absolutely worthless MBS directly to FED at a fantasy price.
Sometimes you have to go all in... read everything you can, then start looking up definitions, then reread it again... Here's a start. http://www.zerohedge.com/news/2012-12-26/record-2-trillion-deposits-over-loans-feds-indirect-market-propping-pathway-exposed and then in the end, drink a couple of beers and say "market-propping-pathway" 5 times fast.
Me wants to know too!
At this point it's asset discovery that trumps price discovery precisely because of the reason you stated. Bernanke was not happy with the direction the economy was going hence he punched out the compass and is deluding himself, Congress and the MSM into thinking that the economy is recovering. The initial phases of asset discovery in Europe have yielded not much in the way of assets except for whatever the proles think they have in safe savings accounts. The ECB is going after depositors because they hold the last of the unrehypotheticated assets. I don't know what shape it will take, but eventually, asset discovery will come to the shores of the US - and I'm not sure that bodes well. Even for "insured" depositors.
You can't miss this "rally", its the one in disguise and the mustache fell off a long time ago.... and it makes the Headlines everyday.
ZH is hardly a trading blog.
Maybe...or maybe not....but one thing is true. Considering what has been going on in the US since 2008, breaking this market has become synonymous with restoring law and order, as well as liberty.
Distribution phase Bitchez!!!!!!!!
Distribution phase normal, all messed up!
Robot Trader, is that you?
It doesn't mean they are not trading these ramps. Just pointing out some really good insights. I buy all the ramps, and bail EOD everyday, and I am in total agreement with their editorial views.
POMO lifting the markets today... and tomorrow... and yesterday... and forever... and evah.
Thanks Uncle Ben.
The charts show me that the market is statistically "normal" but the market in 2013 is vastly different than the markets of the past. The market can no longer be understood by humans looking at tickers. One needs to use computers to understand what makes this market work. Everything the financial workers learned over the last 40 years is of no use.
Correct. You'd think we could finally just get rid of all these bankers and brokers in this country...now that the HFT has made their work meaningless.
My ex-broker never could fathom that all his years of experience and judgement had gone out the window and had no value anymore after Ben started QE.
When do the algos get programmed to buy low volume periods in the never-ending hockeystick and nullify this? Its been documented here for like 5+ years and machine learning bots still havent killed the edge...
This goes nicely with Orwell's whole "boot stamping on a human face forever" thing.
MTFR = Melt The Fu**ing Ramp
Easy answer and that's have been the case since DOW 11k.
The same batch of stocks are sold by MS to GS who in turn sells the same thing to BAC who sell it to JPM who sells it to C who sells it to DB to sells it to another primary dealers who sells it back to MS in a CLOSED LOOP.
This by orders of the president. Until Barack Obama gives the order to crap the market, forced by energy starvation same as Bush in 2008, it will continue like this, CLOSED LOOP TRADING.
DOW and S&P are wholly owned subsidiaries of Primary Dealers/Fed/Federal goverment.
THE STOCK MARKET ABOVE DOW 11K DOES NOT EXIST SINCE SUPPLY/DEMAND FUNDEMENTALS DO NOT APPLY
Canada includes depositor haircut provision in 2013 budget....
http://www.silverdoctors.com/canada-includes-bail-in-provision-for-syste...
Heads up....
Hm. Not surprised.
I've got my money in 100 day canada treasuries
You are saving in DEBT..............
It's not savings. That money is inside RRSP or 401k as it is called in USA.
Cash out of 401k is already out of Canada.
Starve the beast....Buy Gold/silver
Send your Thank You cards to Chairman Mao(Nanke)
'they'seem to buy at important levels as well. Dax 7750 and Ftse arround 6280. Then they buy NQ and rest follow. Same pattern most days.. buy after European close. Odd relapse and but still higher few days later in the USA.
Mmmm...look at those cotton candy equities!
Hollow calories, with taxpayer money paying for the sugar spinning.
Stocks are one sticks throw away from a limit down day on ES. ES down 10 = all in long. When market pushes to unchanged area you unload. Its been easy money. When its that predictable usually the tide will turn.
Since there are next to no actualy "traders" making decisions anymore and its 100% computers, the game will go on until it breaks. The market pushes up on any news - good, bad, ugly, pretty - they are net buyers across the board of most stocks in most sectors.
Bond yields could drop to 0 or negative and stocks would still have bids in them. Its not until the lemmings all get caught at once that the real action starts.
Why should I sell when Ben said he has my back?
its so predictable already and it makes me sick.
we were down at open a decent amount, and somehow, despite terrible problems in europe, bad data, we still fucking get back all losses and are close to green.
how is bernanke a free man today? how is he not in jail?
You really need to ask that question?
Really? At this point in time? Really?
A rhetorical question... hopefully.
The question I have is how is that guy still alive?
Some day, he'll be enjoying a nice meal in his favorite restaurant, and the guy who was lucky to get a busboy job there after losing everything will garrote him.
market? shoot. hasnt been a market around these parts in say 4-5 years i reckon.
Listen, this is the most mindbending exercise in my lifetime. Look at Pharma companies...through the roof. Look at MLP's...through the roof. It goes on and on. The more dogshit the company. the better the performance. Did your stock miss earnings? You lucky sonofabitch! Double down! A week later you are a hero.
As someone in this mess of a business, I own stuff that is at nosebleed levels. I can sell now and lock in gains. Sit back and enjoy a week or two until people start complaining that we are going to miss the next leg up. Eventually the same people I was a hero to will be pissed off at me as I have to chase this thing higher in a month from now.
Or I can sit here and watch these wonderful balances climb....right up until that massive correction. At which point the same people that would have yelled at me for selling will be screaming at me for not selling. Meanwhile in the back of my mind I know that something else may be coming that would make a correction look like a picnic.
Fun times.
Warning to you.
When it collapses, there won't be a bottom for few days. This is all the setup.
ekm I have your warning heeded...to an extent. I have hedges on. hedges up the ass. The problem is, if what you say happens, happens...I don't think we get away with a 20% plus drop and we all buy the dip and be happy. This time around there will be flash crashes, money markets blowing up....etc. etc. etc.
We have gone too far. The next "time" like Yen said yesterday, will be an extinction level event.
Correct.
doh....I was hoping for "calm down"....
LOL
This all reminds me of a star when it goes supernova — right before it collapses in on itself to form a black hole.
Is there an etf for that?
No, you can't even buy that wish, it's before the big bang.
so you get foreplay with that, or what.
No, you get a couple sticks o dynamite to juggle wit a timer on it.
Yep - look at transports - FedEx warns, they sell them for a day or two (barely) then right back in there aggressive bidding/chasing most of the names in the index to new highs most days. Does not matter they have pushed up 20%+ with no correction - they are still a strong buy even with warnings and GDP slowdowns ....
My hat is off to those of you who are involved in this thing professionally, dealing with customers and the like. Wow. What a mess.
Definately have to the watch the geopolitical side of this. The FX side. Cash is going to run scared as this mess unfolds. Is going to result in all sorts of seemingly unusual distortions... such as the potential for the USD to strength into the wind of active monetization. Could even wind up chasing assets and contracts for real work in what could appear for a moment like a recovery. But, we know better. We know that our day in the sun is coming in a big way. Until then, can only ride the wave as best is possible.
If you get a chance, check out Martin Armstrong's stuff. Is yet another interesting perspective on everything. To me, he is somewhere between the worlds of ZH and a trading/investment blog.
It's going to be one kind of a long week, if you're counting.
The mentality you describe is EXACTLY the mentality that was described to me during the dot-com bubble - professional money managers saying they have to plug their nose and stay fully invested in stocks they know are overvalued.
Bernanke is destroying this country with his money printing. When the money printing ends - and it will end, by choice or force - it is going to be a disaster for asset prices. The crash of 2008 will look like nothing compared to what will happen when the money printing stops.
"...but who is buying the dip"?
Capital flow out of the EuroZone may have something to do with it.
Just keeping it up till end of quarter to pad those performance fees. Wonder how many hedge funds will be selling come April 1?
So the sellers stand back whilst the algos ramp up on tiny vols, wait for the book to be loaded with buy orders by human idiots then the waterfall selling commences, rinse repeat until you run out of fools to sell to....
and of course, you can always count on the 11:30am market reversal (like today and yesterday and many other days).
Central banks continue to buy gold
According to figures from the International Monetary Fund, purchases totalled around 20 tons last month.
http://homment.com/centralbanks-gold-buy
Well.........they will admit to 20 tons coming in the front door. I suspect 250 tons came in thru the back door. They will never reveal what they are actually purchasing until well after the fact if ever.
Well, if it's who we all think it is buying the market, all it does is to prove how absoolutely desperate they are to keep the Ponzi going. And we also all know that Ponzis do not go on forever.
I have to say though, that the 'market' moves this week have been the oddest I've seen in the 5 or 6 years that I've been attempting to trade it.
DavidC
If we take a longer time perspective, volume is also bearish as explained here:
http://www.dowtheoryinvestment.com/2013/03/dow-theory-update-for-march-5...
Yesterday's volume readings and a new high by the industrials not confirmed by other indices, confirm that the odds for a correction are increasing:
http://www.dowtheoryinvestment.com/2013/03/normal-0-21-false-false-false...
That used to matter - not anymore. Chart patterns, volume are irrelevant for the most part. Stocks create topping patterns all the time - todays "short" is tomorrows strong buy. New highs on decreasing volume means nothing. They pause for a day or two, pullback perhaps 1% if lucky then continue the push higher.
While I agree that a correction should be near, we have yet to actually have any selloff that lasts for more than a few hours since the beginning of the year. We had 1 day where the ES was down 30 and stayed down, that was undone in 2 days. The rest did not even hold half the losses into the close with the rest undone by the next AM. Most create a V bottom and are done in 3-4 hours max, next day push again.
$85B of money being printed a month, that is all that matters.
Nice to see oil up today.
Volumes are pitiful today.
DavidC
Pump and Dump - Fed style. Just doing the God's work.
Please see number 5 under "Rules Conditional"
http://os24.org/files/a-z/speculation/Dickson_G_Watts-Speculation_as_a_F...
Great article there. However it assumes that we have regular market with many independent players. This is not what I observe - we have a small number of Whales centered around the Fed. All prior rules are void - they rulez. They can write 'Fuck You' into the realtime chart if they wanted to.
The best rule is to stay away from this rigged casino or very slowly accumulate shorts. This stock market manipulation will eventually collapse under its own weight, like any Ponzi Madoff style, and the results will be epic: total vaccum below, zero trust, etc.
"Pump and Dump" - I thought that's what some teenage boys do on those long bathroom breaks.
So, when the Fed does it, it's God's work?
Naturally.
Month end and Quarter end this week, could see some moves next week?
DavidC
Why did I get a negative for stating a fact and asking a question?!
DavidC
You could say almost anything and aggravate someone here. And no it wasn't me.
The neggar doesn't like m-o-v-e-s, and really hates it when anyone mentions or inquires about them.
At least you didn't mention a certain holiday that seems to occur around this time of year.
I once got 5 negs ... yep five for posting "sorry for the double post" caused by a congestion when I was posting the 1st. Bitches !!!
+1 from me :-)
EDIT: I suspect it is the village idiot playing with the mouse buttons - can't read/write so no keyboard access!
When the Rand Paul Act of 2016 finally breaks up the Fed and big banks, Bernanke will be writing his memoirs saying that the reason his QE plans failed was because he needed to do even moar!
You do realise that on the "dips" and the "ramps" the volume constitutes an equal number of sellers and buyers?
You do realise that every trade has both a seller AND a buyer?
You do realise that no matter whether the price of the market is rising or falling, soaring or crashing hard... there are ALWAYS THE SAME NUMBER OF BUYERS AS SELLERS?
It's also true that if volumes are VERY low (like today) if 'someone' has a vested interest in keeping prices up then it takes a LOT less capital to do so.
And if the retail market has deserted the 'market' resulting in less liquidity, it also makes it easier for those vested interests to keep pumping the market up, and keeping genuine participants out.
Where were the buyers and sellers on the 6th of May. The buyers (algos) DISAPPEARED until the quotes were very low and then they came back in.
DavidC
Firstly you cannot keep people out of the market. The market is open to all.
On the 6th May (or any other day) there was exactly the same volume of buying as there was selling.
What you need to distinguish is between the FOUR (not two) types of market orders.
There are
Buy Market Ordera
Sell Market Orders
Buy Limit Orders
Sell Limit Orders
Every trade consists of...
1 x Buy Market Order + 1 x Sell Limit Order
OR
1 x Sell Market Order + 1 x Buy Limit Order
Every trade has both a buyer and a seller. No matter if the market is rising or falling.
People here simply do not understand the mechanics of a dual quote order book.
Are you trying to be obtuse or just doing it accidentally?
What the graphs show is low volume of shares pushing the market up whereas when the market is dropping, there is much higher volume.
Nonoe of that would make sense in a fairly traded market, but it makes perfect sense in a manipulated one.
Reread your post. There could be 50 sellers and one buyer.jus sayin
No the number of participants in the market is not what is being discussed here.
We are talking about trade volume.
1 share traded = 1 BMO & 1 SLO or 1 SMO & 1 BLO
Every stock traded is a match of 1 buyer and 1 seller.
Finally you put in print what I have seen for a very long time in my small part of the world. This happens every day in our market. The same banks every day ramp up the index for no apparent reson whatsoever. Thaks Tyler :):)
so once everyone sells to Ben, he can really take this to the moon!!
Been noticing the same thing... for the past three years. They are so desperate to push the S and P to new highs it's sickening. It doesn't matter if an asteroid hits the earth in the next 24 hours... the S and P WILL PUSH OVER THE 2007 HIGHS, even if only for a few days.
If someone unplugged the S and P E-mini futures tomorrow morning... the entire market would go bezerk and have to be closed.
"If someone unplugged the S and P E-mini futures tomorrow morning... the entire market would go bezerk and have to be closed."
Exactly why they head-faked today. Everybody was shittin' bricks and was ready to push the sell button. They squeezed the shorts all day long. Today's kind of action is what I've seen every time you expect the obvious sell-off, ever since Ben has taken the reign. I bet you anything the Fed is gaming this market. It is the ONLY (false) positive the gov has to point to so they will do anything to keep it rolling as long as possible.
WTF will piss off Ben and kill this market??? Not Goldman ..... Benny will slam the windows shut on them next time they need $$$ and the rest of the big players are attached so some fucking bank, so who dares let this go or go against the fed???
This market is about as real as our paper $$$$ !!!!! Assholes .... ASSHOLES.
Uncle Billy is that you?
How are things in Cyprus?
You say 2 Russian's have you like a wishbone. I see. How can I help you?
Sell all your American stock - keep it in cash - wire it to anyplace not named Cyprus, or Greece, or Europe.
Got you.
You got others on hold?
Got you.
nope this is programmed hft bull shit and why it shouldn't exist, unlimited borrowing at the fed discount window to buy stocks, market manipulation. they are going to buy the dips until a new weekly high along the trend line, and then they are going to sell to a lower low than today, it's so fucked up
The market has been called a "casino". That IS what it really is, only it's a Casino where the only gamblers are the employees, who are just trying to keep it open!!
If, after a day like today, the Fed doesn't understand we are in an equity bubble, they will never get it.
More likely, they are actively trying to support an equity bubble in hopes of creating a "wealth effect".
This analysis of price differentials within the Eurozone is just more proof that Bernanke is a tool of the international Rothschild banking cabal, that Keynesianism is fool-hardy, and that there's not a dime's worth of difference between Republicans and Democrats. Oh, and Americans spend too much time watching T.V., and should be buying gold and bullets.
looks like theyre not going to let any short term technical set up boys. we'll have to go in blind overnight. 20.5vxx calls for overnight bank run is only .17. could be a 6 or 7 banger. sell high, buy low. good luck.
Pretty much - Blind it is.
The problem is they are so good at pulling a gain out of a logical loss.
Even a mason can get silly at that time of night.
since cyprus, its down in the am, up in the pm; overnight europe cashs out from our afternoon ramp. our b/ds then ramp it back up to repeat. this it where it unwinds though. i dont think the b/d-banks over there can wring enough cash out of equities to make up for the liquidity crisis brewing. tomorrow when cyprus banks 'open' and maybe we get confirmation of the 40% haircut (the new template) I want to see reall time video of spainish/italin/portuguese ATM locations. it could be very very alarming to discover the 'fix' was massive confiscation, capital controls, and no access to 'one's own' money. general popluace in the the US is completely unaware right now, utterly utterly asleep.
since the 1555 'call', with todays close, we have 6 overs and 6 unders....with thursday to decide the tiebreak going into a long western holiday weekend. they always pull crap over the long weekends. if its down, it'll go up; if up it'll go down (at least until 10am NY time.
Red alert! The easter bunny will not be on time this year. We can blame the girl scouts for messing this one up. I knew I should have gotten an eariler start to all of this.... My 6 six year neice will deliver the goodies next week.... she been as reliable as old faithful in her participation so far.... so this should go over easy everyone......P.S. Do not worry, trust me on that.
Food and Fuel inflation will be the Feds. death knell. We are literally being pillaged through inflation. People are starting to wake up to the fact that 'cost of living' expenses are getting out of control. What is going here in the states is no different then what is happening in Europe. . It's just a different delivery mechanism.
Oil is over $96bbl and consumption has declined for Christs sake. How long do you think the SNAP card users are going to be able to feed themselves. Is Obumma going to double the monthly allowance? Inflation/hunger just as in the past will bring the house of cards down.
Go read posts on Yahoo. The sheeple are rousing after a long slumber, Many have already begun to put feet to carpet, and many more have put on pants and tied the belt.
Those of us who woke up early and grabbed hold of our pitchforks (guns) will be waiting for these sheeple to join us in the trenches with the phrase: "What took ya so long?"
pathetic is all I can say
pathetic is all I can say
Since 1960, when I began my early career as a stockbroker, I have been studying charts and stuff. Very technical stuff. Complicated stuff. My conclusion, based primarily with the help of two books that are the best ever printed on the industry ("Where Are The Customers Yachts?" and "Fooled By Randomness") is that charts can tell you almost exactly what happened yesterday, the day before, and as far back as you want, or are able, to go. Tomorrow? Not so much.
Particularly interesting in Taleb's book is the chapter called "Skills in Predicting Past Events". Says it all.
J
We'll be rich soon thanks to the benevolence of the bots!
"if you want a picture of the future upside of this market, imagine a boot stamping on a human face - forever,"
---B. Bernanke
"Fuck you Bernanke"
---World
Ben is printing faster, so to back Goldman's algos. They've been screwing with the tape (more than normal) for the past 2-3 days. The manipulation is so damned obvious is not even funny. They've been squeezing (playing with the) shorts all day long.
EDIT: today they even starched and ironed the shorts.... I wore a pair. Even managed to die them green .... pew ....
"Fuck me."
- Bernanke's blow up doll.
You had enough yet Mike?