07 February 2014

SP 500 and NDX Futures Daily Charts - Crushing the Bears On NFP Day

I know some might object to referring to today's trading as 'technical' but I think that is exactly what it was.

By technical I mean that those in the know saw the market structure of positions, to which they have an advantageous view, looked at the buying and selling pressures, saw a short term opportunity to profit, and then jammed the futures up hard after the Non-Farm Payrolls number came out. They ran the stops, and handed out some serious pain to traders who were positioned bearishly.

They can do this in the absence of a consensus of more organic selling volume, as opposed to computer gamesmanship. In a light volume market, dominated by the hot money traders, they can almost write their names in the snow with the tape. I showed a picture of it at the time, but a while ago when AG Eliot Spitzer was taking on Wall Street, they made a nice picture of a hand 'giving him the finger' using the 5 minute SP futures. You can't make this stuff up.  If you want to be a short term trader, you need to understand and respect that. In the intraday trade, fundamentals don't mean squat, unless they are driving the herd to do something in force.

That is not how it always is, at least not to this degree. But with computers dominating the course of the intraday trade and regulators held at bay, its taken on a larger footprint than what might ordinarily might be expected.

The bad news is that in the face of some exogenous bad news, I would think this market is set up to melt down. That is because it is a snarky, in your face 'professional market,' not based on value but on bullshit, on short term money muscle and market gamesmanship.

Does this strike you as improbable? Talk to me after the next crash, when the economic sages are running around waving their hands saying, 'what happened, what happened?'

And by the way, this is not sour grapes from a bear. I have 'no' short position and no stock positions for that matter. I just think this is one hell of a way to allocate capital and revive the real economy. It is a disgrace, and a shame.

Have a pleasant weekend.