Investing in Precious Metals 101 Ad

Dow 11,000 — Too Much Cheering

Login or register to post comments Last Post 13325 reads   81 posts
Viewing 10 posts - 51 through 60 (of 81 total)
  • Thu, May 06, 2010 - 08:45pm

    #51
    Peak Prosperity Admin

    Peak Prosperity Admin

    Status Bronze Member (Offline)

    Joined: Oct 31 2017

    Posts: 1613

    count placeholder

    Foreshadowing

The spike-down in the markets today reminded me of the mysterious spike-ups in the dollar before its rally began. The $ spike-ups were also considered to be due to technical problems with trades…..yeah right.

 

  • Thu, May 06, 2010 - 08:53pm

    #52
    Peak Prosperity Admin

    Peak Prosperity Admin

    Status Bronze Member (Offline)

    Joined: Oct 31 2017

    Posts: 1613

    count placeholder

    Re: Foreshadowing

[quote=JAG]

The spike-down in the markets today reminded me of the mysterious spike-ups in the dollar before its rally began. The $ spike-ups were also considered to be due to technical problems with trades…..yeah right.

 

[/quote]

Jeff –

Take a look at a Time and Sales sheet and tell me other than the bad trades how many trades you see executed for P&G and 3M at the market lows.  Certainly not enough to match up with Asks that didn’t exist.

Sometimes it is what it is.

  • Thu, May 06, 2010 - 11:12pm

    #53
    Peak Prosperity Admin

    Peak Prosperity Admin

    Status Bronze Member (Offline)

    Joined: Oct 31 2017

    Posts: 1613

    count placeholder

    Re: Foreshadowing

[quote=Dogs_In_A_Pile]

Jeff –

Take a look at a Time and Sales sheet and tell me other than the bad trades how many trades you see executed for P&G and 3M at the market lows.  Certainly not enough to match up with Asks that didn’t exist.

Sometimes it is what it is.

[/quote]

I’ll bet leveraged longs who got sold out by their brokers at the intraday lows don’t get their money or their positions back.

That’s a real-money example of ‘it is what it is.’ Cry

  • Fri, May 07, 2010 - 12:08am

    #54
    Peak Prosperity Admin

    Peak Prosperity Admin

    Status Bronze Member (Offline)

    Joined: Oct 31 2017

    Posts: 1613

    count placeholder

    Re: Foreshadowing

[quote=machinehead]

I’ll bet leveraged longs who got sold out by their brokers at the intraday lows don’t get their money or their positions back.

That’s a real-money example of ‘it is what it is.’ Cry

[/quote]

MH –

Going through T&S charts right now starting at 2:30, and so far nothing big.   A couple hundred shares here and there up through 2:50:08 – all right around $71.

I’ll follow up if I can find anything that stands out. 

Interesting to note that at MMM low of $68, the Puts I have only went to $6.60.  No options traded or I would have seen at least a $15 premium on the contracts.  They closed at $5.95.  I’m thinking this happened so fast (signature response to a program sell error) nobody had any time to do anything – right or wrong.  Unless of course someone was foolish enough to have a market order sell somewhere down in the mid 70s.

This will be interesting to fully dissect though.

  • Fri, May 07, 2010 - 12:48am

    #55
    Peak Prosperity Admin

    Peak Prosperity Admin

    Status Bronze Member (Offline)

    Joined: Oct 31 2017

    Posts: 1613

    count placeholder

    Re: Foreshadowing

Here’s an official voice:

May 6 (Bloomberg) — Computerized trades sent to electronic networks turned an orderly stock market decline into a rout today, according to Larry Leibowitz, the chief operating officer of NYSE Euronext.

While the first half of the Dow Jones Industrial Average’s 998.5-point plunge probably reflected normal trading, the selloff snowballed because of orders sent to venues with no investors willing to match them, Leibowitz said in an interview on Bloomberg Television.

“If you look at the charts you can see fairly clearly where the trades came in,” he said from New York. “It’s that V-shaped drop where it came down and snapped right back up. You had some very high-cap stocks trading down 50 percent or large percentages in a split instant because there really was no liquidity in electronic markets.”

http://www.bloomberg.com/apps/news?pid=20601087&sid=aktCEVdfmfys&pos=1

I want to highlight that phrase, ‘no liquidity.’ Currently, most rich-country governments are ‘liquid but insolvent’ — to the tune of several years’ worth of GDP. One exceptional case — Greece — is both illiquid and insolvent.

Electronic markets are the preferred platform now. When liquidity dries up, they go haywire.

During the crash of 1987, some NYSE specialist firms blew out their capital while trying to meet their obligation of ‘maintaining liquid markets.’ In electronic markets, there is no such obligation. Accordingly, ‘quantum leaps’ in prices can occur. From Dow 11,000 to Dow 1,000 in the blink of an eye. Or whatever.

As the late Saddam Hussein used to say, ‘Anything is possible now, my brothers!’ Surprised

 

  • Fri, May 07, 2010 - 01:47am

    #56
    Peak Prosperity Admin

    Peak Prosperity Admin

    Status Bronze Member (Offline)

    Joined: Oct 31 2017

    Posts: 1613

    count placeholder

    Wow!

MH –

Not sure what to make of it – there were a $hit load of 100 share trades on the THRD and NMS exchanges from 14:30 through after hours.

The low trades on T&S were around $69 and in 100 share blocks.  It started fading from $84 at around 14:30 and started lifting of $70 around 14:46.

If there was a huge trade that came as a limit order below the bid, the market maker doesn’t have to show it on T&S – only that a trade occurred at that level.  It lifted from ~$72 around 14:46 back to ~$83 by 14:58 and floated into the close settling around $84.

Here’s where it gets interesting – At 16:48:51, the THRD lights up at $73.25 and there are literally pages upon pages of 100 block trades going through – all at $73.25.  There are close to 2000 trades executed in 6 seconds.  Then at 16:48:57 the THRD jumps to $84.24 and about 300 trades go through.  After that, most of the trades originate from the NMS exchange and are the standard Best Bid/Best Ask sell and buy drill – again, all around $83-$84.

Rumors are flying that it was a P&G trade that started the landslide.  Their T&S looks just like 3M, except the low trade came in on the NMS exchange at ~$39 at the same time the THRD was executing at $60 – all right around 14:47:15.  By 14:48:11 it had recovered to ~$60. 

I’d like to know who pocketed the $11 spread on the 3M trades from 16:48:51 to 16:48:57.

It still looks like classic programmed sell/buy response to an external price stressor to me.  In other words, when all is said and done, the market was down 350 today – NOT 1000.

It will be interesting to see if any of these trades get whistled out overnight.   

  • Fri, May 07, 2010 - 02:04am

    #57
    Peak Prosperity Admin

    Peak Prosperity Admin

    Status Bronze Member (Offline)

    Joined: Oct 31 2017

    Posts: 1613

    count placeholder

    Re: Dow 11,000 — Too Much Cheering

Nathan Martin on Nathan’s economic edge thinks the swing came after Harry Reid made a comment that the audit the fed bill would come up for a vote . He postulates the central banks flexed their muscle with the 1700 point swing.

He also says Nasdaq is voiding all stock trades above or below 60 percent of the closing price.

They are now blaming the swing on a trading mistake by a trader who sold several billion in Proctor and gamble stack when he meant to sell a few million.  Yep.  damn those decimal spaces.

  • Fri, May 07, 2010 - 02:06am

    #58
    Peak Prosperity Admin

    Peak Prosperity Admin

    Status Bronze Member (Offline)

    Joined: Oct 31 2017

    Posts: 1613

    count placeholder

    Re: Dow 11,000 — Too Much Cheering

A couple interesting stats:

The St Louis Fed released their most recent Adjusted Monetary Base today.  They have been reducing the Base slightly for the last couple months, and are now at levels close to where they were when the market sold off in January quite rapidly.  Liquidity is highly sensitive right now (and has been for 18 months).

M-3 as calc’d by John Williams of http://www.shadowstats.com is contracting exponentially.  Its in a death spiral. 

For virtually the entire run up in the markets from a year ago – there has been very little volume.  There has been no liquidity all along.  The volume has been pathetic.  Take away high frequency trading and it would be a ghost town.  The issue with how most of the Street calculates volume is that when panic sets in, their estimate of what liquidity should be there is way off – – that is, they dont adjust it downward for high frequency trading which is liquidity that will vanish quickly.  That said, I dont think either computerized trading, or even high frequency trading is the culprit today – rather its the scapegoat.  There were no buyers because everyone is waking up to the idea that credit is in horrible shape still.  Currencies were flying around at volatilities perhaps never seen today – BEFORE the equity decline.  There were some seriously forced hands today, and then when coupled with what is natural (all volume minus high frequency trading) liquidity for the last year the market moved in kind.

Just like short sellers being a scapegoat for the financial crisis rather than millions of people getting way too much leverage on bad credit with little income – – today should not be about some cpus gone wild.  The focus should be what triggered those cpus to get into the situation that could cause panic.  Currency fluctuations never seen before + credit markets going nuts LED the selloff in equities.  Lets focus on real cause effect that is lasting rather than the scapegoat of the day.

 

  • Fri, May 07, 2010 - 02:14am

    #59
    Peak Prosperity Admin

    Peak Prosperity Admin

    Status Bronze Member (Offline)

    Joined: Oct 31 2017

    Posts: 1613

    count placeholder

    Re: Dow 11,000 — Too Much Cheering

[quote=docmims]

Nathan Martin on Nathan’s economic edge thinks the swing came after Harry Reid made a comment that the audit the fed bill would come up for a vote . He postulates the central banks flexed their muscle with the 1700 point swing.

He also says Nasdaq is voiding all stock trades above or below 60 percent of the closing price.

They are now blaming the swing on a trading mistake by a trader who sold several billion in Proctor and gamble stack when he meant to sell a few million.  Yep.  damn those decimal spaces.

[/quote]

Reid couldn’t find his ass if he sat on his hands so I really doubt anything he said made the Central Banks pump some iron.

I went through more than 6000 lines of trades on Time and Sales sheets today.  The programmed sell error story holds a lot of water.  Whistle outs overnight and tomorrow will confirm it.

But someone will come up with a spooky dark story I’m sure.

  • Fri, May 07, 2010 - 02:37am

    #60
    Peak Prosperity Admin

    Peak Prosperity Admin

    Status Bronze Member (Offline)

    Joined: Oct 31 2017

    Posts: 1613

    count placeholder

    Re: Wow!

[quote=Dogs_In_A_Pile]

MH –

Not sure what to make of it – there were a $hit load of 100 share trades on the THRD and NMS exchanges from 14:30 through after hours.

The low trades on T&S were around $69 and in 100 share blocks.  It started fading from $84 at around 14:30 and started lifting of $70 around 14:46.

If there was a huge trade that came as a limit order below the bid, the market maker doesn’t have to show it on T&S – only that a trade occurred at that level.  It lifted from ~$72 around 14:46 back to ~$83 by 14:58 and floated into the close settling around $84.

Here’s where it gets interesting – At 16:48:51, the THRD lights up at $73.25 and there are literally pages upon pages of 100 block trades going through – all at $73.25.  There are close to 2000 trades executed in 6 seconds.  Then at 16:48:57 the THRD jumps to $84.24 and about 300 trades go through.  After that, most of the trades originate from the NMS exchange and are the standard Best Bid/Best Ask sell and buy drill – again, all around $83-$84.

Rumors are flying that it was a P&G trade that started the landslide.  Their T&S looks just like 3M, except the low trade came in on the NMS exchange at ~$39 at the same time the THRD was executing at $60 – all right around 14:47:15.  By 14:48:11 it had recovered to ~$60. 

I’d like to know who pocketed the $11 spread on the 3M trades from 16:48:51 to 16:48:57.

It still looks like classic programmed sell/buy response to an external price stressor to me.  In other words, when all is said and done, the market was down 350 today – NOT 1000.

It will be interesting to see if any of these trades get whistled out overnight.   

[/quote]

Congratulations on doing your due diligence, by reading the Times & Sales report.

Frankly I’m not enough of a market insider to interpret what it means. It’s bizarre to have a ‘quantum leap’ in prices from the $73 to $83 level, with thousands of trades going through. Sure, someone might have gottten lucky on a huge, below-market limit order. But it sounds like more than a one-in-10,000 lightning strike.

Doubtless the exchanges are going through the T&S report just as you have. Unfortunately, I don’t trust their objectivity. Some story will be released for public consumption. But I’ll take it with a grain of salt.

The point remains, that liquidity can evaporate on electronic exchanges under duress, producing bizarre pricing. If I recall correctly, during the 1987 crash, an after-hours trade took place on Nikkei index futures in Singapore, implying a settlement price of below zero. In the antimatter shadow universe, stocks don’t make money — they cost you money!

Viewing 10 posts - 51 through 60 (of 81 total)

Login or Register to post comments