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Frontrunning The Frontrunning Of The "European Close"

Tyler Durden's picture




 

From Peter Tchir of TF Market Advisors

So we get an early start to the Europe goes home rally?

Since by now even my mother knows that US stocks rally when Europe goes home, it only makes sense to rally well ahead of it?  It has become too well known that this trend exists and as others have also mentioned, when those simple rules break, they often break ugly.  I would be very careful betting that we get a rally when Europe goes home. 

Obama delivered an interesting speech.  What gets implemented and what it actually accomplishes, are in doubt.  The G-7 is unlikely to unveil any grand plan over the weekend.  The Fed and ECB have spoken and have failed to help the market.  If anything, dissent within the ECB about can be done is growing and their need to support distressed banks longer, is frankly, distressing.

We may get another big rally from here, but if the primary basis is that Europe going home will help, I think that is more than priced in.  If it is because we have bounced before and keep trying to get to 1,200, that may be true, but it took several iterations this spring to finally break 1,265.  This may not be the start of the move that brings us to new lows in stocks, but I find far more compelling fundamental reasons why stocks should be back to their August lows.  And yes, I believe fundamentals include macro reasons.

Finally, it does seem like a lot of hedges were taken off by the "active traders" (sounds better than "fast money crowd").  The market is far less short and many seemed to have bet on a sustainable year end rally to save their returns.   

 

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Fri, 09/09/2011 - 10:54 | 1650753 Cognitive Dissonance
Cognitive Dissonance's picture

If the HFT algos play with each other is that considered incest?

Just askin' cuse.....well, enquiring minds wanna know.

Fri, 09/09/2011 - 10:58 | 1650769 fuu
fuu's picture

Would you forgive them if it was? =)

Fri, 09/09/2011 - 11:13 | 1650833 Cognitive Dissonance
Cognitive Dissonance's picture

Only if they included me in on the menage a trios.

Ouch, watch those sharp elbows for crying out loud.

http://en.wikipedia.org/wiki/M%C3%A9nage_%C3%A0_trois

Fri, 09/09/2011 - 11:22 | 1650872 fuu
fuu's picture

Sparks fly in the dead of the night
It all comes together
When they shoot out the lights
50,000 watts of power
And it's pushin' overload
The beast is ready to devour
All the metal they can hold
Reachin' overload
Start to explode

Fri, 09/09/2011 - 15:58 | 1652237 Bolweevil
Bolweevil's picture

Ronnie Montrose! Woot!!

http://youtu.be/tk52nGxF-jc

ride on thebenbernank

Fri, 09/09/2011 - 11:01 | 1650783 alien-IQ
alien-IQ's picture

I believe Philip K. Dick addressed this issue several times.

Do Androids Dream of Electric Sheep?

Fri, 09/09/2011 - 11:23 | 1650876 Cognitive Dissonance
Cognitive Dissonance's picture

Yes. I believe he has. And yet the question ultimately remains unanswered.

Fri, 09/09/2011 - 11:31 | 1650922 alien-IQ
alien-IQ's picture

Where the hell is Stanley Kubrick when you need him:-(

Fri, 09/09/2011 - 11:03 | 1650787 Cassandra Syndrome
Cassandra Syndrome's picture

Euuuugggghhhh, yuck. 2 Skynet Cyborgs hard at it? It aint 9 and a half weeks, lets put it like that...

Fri, 09/09/2011 - 10:54 | 1650755 Debtless
Debtless's picture

The crooked levitation machine is unstoppable.

Fri, 09/09/2011 - 11:51 | 1650756 HelluvaEngineer
HelluvaEngineer's picture

.

Fri, 09/09/2011 - 10:57 | 1650765 Irish66
Irish66's picture

Art needs a stiff one

Fri, 09/09/2011 - 10:58 | 1650770 Tsar Pointless
Tsar Pointless's picture

Green day, Amerikkkan idiots!

Fri, 09/09/2011 - 10:59 | 1650773 vast-dom
vast-dom's picture

<----MARKET TUMBLES PRE SEPT20-21

<----MARKET LEVITATES ON PRE-HOPIUM HOPIUM UNTIL SEPT20-21

 

Vote Biyatchez!

Fri, 09/09/2011 - 11:00 | 1650778 DefiantSurf
DefiantSurf's picture

you left out market levitates on PPT

Fri, 09/09/2011 - 11:02 | 1650784 vast-dom
vast-dom's picture

you mean OPP?

Fri, 09/09/2011 - 11:04 | 1650794 DefiantSurf
DefiantSurf's picture

OPP?

Fri, 09/09/2011 - 11:06 | 1650801 Tsar Pointless
Tsar Pointless's picture

Yeah, you know me!

Fri, 09/09/2011 - 11:07 | 1650810 DefiantSurf
DefiantSurf's picture

I think OPP still falls under hopium

Fri, 09/09/2011 - 11:08 | 1650812 SeverinSlade
SeverinSlade's picture

Just look at a chart for the S&P since August 8th.  We've been essentially trading sideways in a range between 1101 and 1230.  The only way that the market really tanks is if things spiral out of control in Europe.  Poor economic indicators mean nothing in this market. 

Potential catalysts for a plunge in equities are IMO:

Greek default
EFSF vote fail (Sept. 29th after the two day FOMC meeting)
BAC doing a Lehman impression
Etc.

Will any of these happen?  Who knows.  Only way I'm playing equities is buying SPXU, SQQQ, and SDOW real market strength (S&P near 1200).  Beyond that, gold and silver are the only things to be buying these days.

We all know that the markets WILL tank at some point.  The question is when.

Fri, 09/09/2011 - 10:58 | 1650774 alien-IQ
alien-IQ's picture

I was just thinking this very thing as I watch the /ES slither up 10 points since the open.

I can't imagine anyone wanting to go into this weekend with a long position. That's just begging for abuse.

Fri, 09/09/2011 - 11:07 | 1650809 Belarus
Belarus's picture

...but keep in mind logic doesn't work short term in this market. In fact, the obvious trade is almost always going to be the losing trade. Go opposite of any convictions. For e.g., after Obama's speech one would have logically concluded Gold and Silver would have had a montrous day today.

Think about what Obama is proposing: $457 billion in new stimulus money via robbing from Social Security and Medicare and raising taxes on the rich to be paid for, or in Obama's word "this plan will be paid for." Think about that: how can this plan be paid for when we already have $1.5 trillion in unpaid for bills a year? And let's pretend like children for a moment the Tea Party and Boehner folks agree to everything in Obama's proposal: then doesn't this severely step on the Super Committee's toes?

Of course, what this would mean is the Super Committee is a joke and both party's know it. In fact, Obama's plan makes a mockery out of the Super Committee and our budget deficts. Therefore, Gold and Silver you would have assumed would be 5% today....

But oh no....the despots were ready for that. The calls already made into the CME, etc. For now, at least hint at an immenent margin hike--that'll cool things off. 

The non-stop intervention and manipulation of perceptions is almost impossible to trade. The only answer: take all money out of the market. Take all money sands working capital out of the banks. Buy PM's, Guns, Ammo, Food, and water. In fact, those are the only bargains left in this market except for ammo costs. 

Fri, 09/09/2011 - 11:12 | 1650823 SeverinSlade
SeverinSlade's picture

"...but keep in mind logic doesn't work short term in this market."

That says it all. 

QE1 and QE2 were both monumental failures...Yet QE3 WILL WORK!

Fri, 09/09/2011 - 11:18 | 1650853 alien-IQ
alien-IQ's picture

the only logic I apply to this fucked up market is:

1) Try to close every day FLAT.

2) Try to bee done by 11am

3) Never ever ever hold anything over a weekend.

So far so good.

Fri, 09/09/2011 - 10:59 | 1650776 Belarus
Belarus's picture

With Europe's banks gettting mauled, I would suggest dangerous days are ahead for the market. 

Fri, 09/09/2011 - 11:00 | 1650779 TradingJoe
TradingJoe's picture

At this point we are all just guesstimating because algos can't be "analized" :))) my humble take: we sell off today, too much headline risk out of Europe over the weekend, next week will be a bit more interesting but the "big one" won't happen ahead of the FEDsters the coming 21st! Bancheros still klinging to the (vain) hope they'll get "something" this month!

Fri, 09/09/2011 - 11:03 | 1650789 HedgeAccordingly
HedgeAccordingly's picture

you gotta love a good front run.. the speech went over well.. good work Barry..

some friday action 

 

http://www.hedgeaccording.ly/p/babe-of-day.html

Fri, 09/09/2011 - 11:03 | 1650790 monopoly
monopoly's picture

Have 0 interest in any broken market stock rally today. None.!

Fri, 09/09/2011 - 11:05 | 1650796 DefiantSurf
DefiantSurf's picture

it will melt up with or without you friend

Fri, 09/09/2011 - 11:07 | 1650793 Josh Randall
Josh Randall's picture

Are you trying to say someboy's Mother is involved in this ?

http://www.youtube.com/watch?v=SeOBZWQEJE4&feature=related

Fri, 09/09/2011 - 11:07 | 1650804 Mactheknife
Mactheknife's picture

Not today...too much weekend risk.

Fri, 09/09/2011 - 11:12 | 1650827 espirit
espirit's picture

Probably not a good idea to stay long the US Indices through the weekend, even though it's been buy the rumors-sell the news lately.

Dollah cost averaging in PM's is the proper long in this global shenanigan excuse for a market.

Fri, 09/09/2011 - 11:11 | 1650822 NotApplicable
NotApplicable's picture

The singularity is near!

Fri, 09/09/2011 - 11:19 | 1650858 catladdy
catladdy's picture

-11:15am: ES unable to get a close above 1167.5 dec, trying to find a support/catapult from this mornings low. 

Fri, 09/09/2011 - 13:10 | 1650901 buzzsaw99
buzzsaw99's picture

be like buffett and pick yourself out a nice tranny.

Fri, 09/09/2011 - 11:28 | 1650908 catladdy
catladdy's picture

-ES dec: OOPS, new low at 1154.

Fri, 09/09/2011 - 11:36 | 1650941 catladdy
catladdy's picture

SPX bears are lookin' for Tuesday's low at 1140.

Bulls will be happy with a cash close around 1173.

I haven't a clue where it'll close

Fri, 09/09/2011 - 11:44 | 1650990 adr
adr's picture

Look at the earnings news. Frickin Lulu claims their profit soared 75% and the stock is down 7%. Normally singular earnings would have an effect on a real stock but since Lulu and the rest of the momentum stocks are nothing but hedge fund tools they move as the overall market moves. They are just bought and sold in large baskets and real sales and earnings, which are nowhere near the sizzling books, mean nothing at all.

I may be wrong but I never remembered a time where there were this many overvalued stocks at one time. I don't think the dotcom era had examples of stocks this pumped with the kind of macro economic indicators we've got going. Seriously a fucking soda company like Hans trading at $90 that doubles in six months. Same with the other fucking soda company whose home machines are now on clearance at every retailer. After this holiday I don;t think you'll see another Sodastream system anywhere save a few discount retailers. The stock gets chopped in half and people still buy it. The stock is still $40 with a 42 P/E and it is over for the company at retail in the USA.

The market doesn't reflect reality because every single major player doesn't have a clue what reality is. They don't live in the real world and never venture into it. If you took a major Wall Street exec to a shopping mall the middle of Indiana, he wouldn't know where the fuck he was. He would notice the three people that walk into a store of his favorite momo stock and ask where all the customers are.

CEOs and stock traders only know cooked books and bullshit press conferences because that is the way they live their lives. Do you think any CEO of a major corporation has actually filed an honest income tax report in their life? Do you think the accounting of any major corporation is honest? But how would the Wall Street set know any different, that is how they live thier life, as a total fraud. To them fraud is reality.

Fri, 09/09/2011 - 11:52 | 1651044 catladdy
catladdy's picture

ES OOPS: ALGO longs were trick f**ked

Da Bears are looking to take out 1130 ES dec

Fri, 09/09/2011 - 11:55 | 1651059 catladdy
catladdy's picture

Feelin good Billie Rae

Fri, 09/09/2011 - 13:32 | 1651553 bugs_
bugs_'s picture

LOL!!

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