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There are only two possibilities that I can come up with, and both demand answers:
"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?
"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!
#2 makes for great conspiracy theories, but my money is on scenario #1 - someone got forcibly liquidated into the close, perhaps a big customer, perhaps a hedge fund, but someone.
What does this all mean? A few things:
The stops up there are gone. They were potential rocket fuel for next week and the propellant to take us to - and potentially through - the 200DMA on the cash.
A bunch of someones had a lot of contracts that were short taken out on them. Those nearly 250,000 E-mini contracts did change hands, and odds are a very large percentage of them constituted stop-loss orders on contracts sold short from when we were up toward 933 a few weeks ago. Those traders are going to be quite pissed off, but that's the risk of the game.
Next week is very likely to be extraordinarily violent, especially Monday. /ZN (10 year Treasury futures) has seen an insane drop in open interest over the last few weeks. This little game undoubtedly severely damaged open interest in the E-Mini /ES contract.
Originally posted by Tentickles
It pretty much means someone is trying to manipulate the market into looking reallllllyyyyyyyy good. I mean really good.
No doubt we will hear about this as a sign the economy is recovering.
Take my word for it. It's not.
Edit: Fat fingers.
[edit on 5/30/2009 by Tentickles]
Originally posted by octotom
reply to post by Tentickles
I've had this thought for a while now, that someone is playing around with the markets to make things seem better than they are. I wonder what the purpose would be--to lull the world into a false sense of security, just to pull the rug out from under it?
Originally posted by Stormdancer777
reply to post by LostNemesis
Looks like we all have a lot of post that are connected.