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Originally posted by GreenBicMan
914-916 on the ESM9 for a breakout to the positive side as well...
Ive been pretty good at reading these lately with some studies I have been doing (i.e. call on dow earlier this afternoon)
Not that I am always right or anything, but I have a better chance than flipping a coin
When the bond market closed, there was this huge coiled spring effect in the FX market. Everything had moved so much that it was only natural to pull back some, that pullback was in the direction it needed to go for equities to go up.
I can't explain the exact relationships except on the most simplistic level: When people buy USD, it ends up in equities (usually, today it was T's and MBS) when people sell USD, the market drops because it's coming out of equities....
Originally posted by redhatty
That ramp in the last minutes of trading was all from big financials. That was an offer-side collapse and it was triggered in the pit.
Originally posted by GreenBicMan
While I actually agree with everything this chart says (plus more, that I have outlined in previous posts with my resistance levels..) I can't but help seem to feel that this rally hasn't even begun yet...
We need some REALLY GOOD NEWS THOUGH.. I think RR has outlined the news for the coming week in a previous post at the top of this page.. that could totally correlate with a breakout..
Time will tell..
There were 146,083 contracts traded in that one-minute period between 14:59 and 15:00 (Central); the next minute, when the real dislocation hit, traded 91,774 - after the cash market bell had rung.
The closing bell is usually busy. But this sort of volume is absolutely unheard of. To put it in perspective yesterday the same time recorded 26,540 contracts, and 36,642 the minute after.
Volume was light all day, as is somewhat common in the summer on a Friday. The close started its usual increase, and was up to 23,000 contracts at 14:57 with two minutes remaining.
Then all hell broke loose.
"Paper", or institutional representation, was stalking the close; the pit audio feed so stated. Directly in front of the bell 1,000 contracts were bought - as near as I could tell at the market.
Those are "Big" contracts, each being 5 of the /ES minis; this was, in effect, a 5,000 contract /ES market order.
The reaction was instantaneous. The offer side of the market collapsed and the /ES rocketed higher. In the pit, trades went off as high as 925, but on the E-Mini trades were recorded as high as 927.75. As quickly as it got there, it collapsed back to 922 - a nearly six-handle (3/4 of one percent) straight-up and down spike.
Now here's the problem:
For me to believe this was "organic", that is, this was an un-forced order, I have to believe that someone wanted to go home net long the equivalent of 5,000 /ES contracts into the weekend at a severely disadvantaged price. The market had been calm all day; if you wanted to buy 1,000 spoos (equivalent to 5,000 E-Minis) there was plenty of opportunity to do so all day long. This sort of market order was guaranteed to dislocate the market - so the buyer had to simply not give a damn what sort of price they got.
How bad of a fill was this? To put this in perspective each /ES point is worth $50 per contract.
Each single point that was disadvantaged to the buyer by this execution cost him a cool quarter-million bucks, and on average, the "disadvantage" was likely around five full handles, meaning that the buyer of these contracts, if this was an "organic" order, willingly ate $1.25 million dollars.
I don't believe for one second that is what happened.
There are only two possibilities that I can come up with, and both demand answers:
1. "Someone" was forcibly liquidated out of a short position - a fairly big one. 1,000 S&P "big" contracts has a maintenance margin requirement of $22,500,000 - that's not a small position, and each point, as noted, has a $250,000 move associated with it. Who was it and why?
2. "Someone" who didn't give a damn if they lost a sizable amount of money intentionally wanted to shove the cash market up through the 200DMA, a critical technical level. They were 1 minute late; they succeeded in doing so in the futures, but not the cash!