Comments on: All-in, all over again

By: Mike

Mike — Fri, 16 Apr 2010 23:32:37 +0000

Roger,

Interesting about the Mondays and morning futures action. The weak volume rallies and strong volume declines don’t spell manipulation to me, just a rally lacking strong sponsorship.

But how come everything moves together? Commodities, currencies, world stock markets, credit spreads, etc? This is just too big a production, too wild a forest to tame.

By: rogerjarema

rogerjarema — Wed, 07 Apr 2010 17:06:27 +0000

Hi Mike, very strong arguments against the manipulation things. However, from the manipulation corner I see equally compelling arguments/evidences that suggest, e.g.
1. 27 of last 31 Mondays are up. 16 out of last 17 Mondays are up. This is ridiculous no matter how you look at it statistically. 16 out of 17 is almost outside 2x the standard deviation assuming each day has 50-50 chance of up or down.
2. Very thin volumes lead to strong melt ups.
3. Very frequently initial big downs in the futures get settled up starting 3 a.m. (remember the Dubai blow up in November?)
4. quite a while ago ZeroHedge had a posting of SPX comparison if there were no future melt ups resulting in big gap ups and the present condition, the performance difference is huge. I’ll try to find the post.
5. The last 6 months, it seems to almost always be the case that when volume is big, there’s a strong decline.

There are many more, but the Monday melt ups really put the “no manipulation” argument in question.

By: PEJ

PEJ — Wed, 07 Apr 2010 12:22:57 +0000

Hi Mike. Thanks for cheering us up
I bought some puts yesterday on IWM at 70. As I had kind of guessed, the 65 didn’t resist long.
The question is: when will a break down happen. The main reason why I bought the puts yesterday was that my brain was telling me “it looks like it’s never going to fall”.
But let’s not forget that “market can stay irrational longer than you can stay solvent” or something like that. (one of the few Keynes thoughts I would agree with).