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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Cognitive Dissonance's picture

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

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

fuu's picture

Would you forgive them if it was? =)

Cognitive Dissonance's picture

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

Ouch, watch those sharp elbows for crying out loud.

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

alien-IQ's picture

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

Do Androids Dream of Electric Sheep?

Cognitive Dissonance's picture

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

alien-IQ's picture

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

Cassandra Syndrome's picture

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

Debtless's picture

The crooked levitation machine is unstoppable.

Irish66's picture

Art needs a stiff one

Tsar Pointless's picture

Green day, Amerikkkan idiots!

vast-dom's picture




Vote Biyatchez!

DefiantSurf's picture

you left out market levitates on PPT

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

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.

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.

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. 

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!

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.

Belarus's picture

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

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!

HedgeAccordingly's picture

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

some friday action

monopoly's picture

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

DefiantSurf's picture

it will melt up with or without you friend

Josh Randall's picture

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

Mactheknife's picture

Not today...too much weekend risk.

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.

NotApplicable's picture

The singularity is near!

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. 

buzzsaw99's picture

be like buffett and pick yourself out a nice tranny.

catladdy's picture

-ES dec: OOPS, new low at 1154.

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

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.

catladdy's picture

ES OOPS: ALGO longs were trick f**ked

Da Bears are looking to take out 1130 ES dec

catladdy's picture

Feelin good Billie Rae