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ES and the Great POMO Rally
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ES and the Great POMO Rally

  #491 (permalink)
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It looks like the gap is being covered as I typed

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  #492 (permalink)
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Michael.H View Post
Thats part of it, but it also has to do with areas of prior resistance/support. You also want to mark areas where important news came out, and market made a big move. Those areas will usually respond when the market revisits. Also, intermarket analysis( bonds is a big one, oil, gold, forex).. and market leading stocks in relation to the actual index. Market sells off on the ES, makes a lower low, while aapl and goog gap up. Greece defaults, market goes higher. Don't listen to reasons why, just look at the what.


I have alot of posts if you use the search function.

I have to agree with you on this one. It is better to forget about “why” the market is moving in one direction or another, and just concentrate on the fact, that it “is”.

Traders like to think in terms of cause and effect, and in reality, it is that simple logic that determines price. More buyers than sellers, and the market goes higher- more sellers than buyers, and the market goes lower.

Prices moves as a result of traders’ changing attitudes, and shifts in perception about the market. At the most basic level people buy stocks because they think the price is going to go up, and they sell stocks because they think the price is going to go down. On a more practical level they are either following movement and momentum, or are “trapped” and are exiting their positions. This thought process is carried out at a very basic emotional level and has nothing to do with fundamentals or technicals, although a fundamental and technical rationale is often trotted out to justify why the market is going higher or lower.

Traders can visualize a double-top, a head-and-shoulders formation, and identify a Fibonacci retracement, but the market can’t. It’s the technicians that try to attach a logical meaning to these abstract patterns, and the concomitant phenomena of self-fulfilling prophecy, that makes it appear to play out.

We would like to believe there is a natural development of price unfolding over time. The eternal struggle between buyer and. seller and the inextricable laws of supply and demand that inevitably determine fair value. But there is nothing natural about the current market - it’s being controlled by an 800 lb. gorilla. As mentioned byTyler Durden of ZeroHedge on March 4, 2011, every single asset class correlates 1:1 with the Fed's balance sheet. Take a look at how the S&P 500 correlates perfectly with the asset purchases of the Fed.

“Extend and pretend” has bought the Fed time ( 2.5 years to date), and the ECB bailouts continue to buy the EU more time, but as Charles Hugh Smith said,At some point, the announcement of a new bailout or Fed "fix" will boost spirits and markets for a few days rather than a few months. At the very end of this process, the announcement of the next "fix" will crash the credit and stock markets because participants will finally understand that the fixes are only floundering, last-ditch acts of desperation which have zero chance of actually working.”

But until then...

Q: Where is the market going next?

A: Where does an 800 lb. gorilla sleep?

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  #493 (permalink)
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Tiger, it had been a long time since you posted. Do you have any strategy for the current market situation?

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  #494 (permalink)
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tigertrader View Post
I have to agree with you on this one. It is better to forget about “why” the market is moving in one direction or another, and just concentrate on the fact, that it “is”.

Traders like to think in terms of cause and effect, and in reality, it is that simple logic that determines price. More buyers than sellers, and the market goes higher- more sellers than buyers, and the market goes lower.

Prices moves as a result of traders’ changing attitudes, and shifts in perception about the market. At the most basic level people buy stocks because they think the price is going to go up, and they sell stocks because they think the price is going to go down. On a more practical level they are either following movement and momentum, or are “trapped” and are exiting their positions. This thought process is carried out at a very basic emotional level and has nothing to do with fundamentals or technicals, although a fundamental and technical rationale is often trotted out to justify why the market is going higher or lower.

Traders can visualize a double-top, a head-and-shoulders formation, and identify a Fibonacci retracement, but the market can’t. It’s the technicians that try to attach a logical meaning to these abstract patterns, and the concomitant phenomena of self-fulfilling prophecy, that makes it appear to play out.

We would like to believe there is a natural development of price unfolding over time. The eternal struggle between buyer and. seller and the inextricable laws of supply and demand that inevitably determine fair value. But there is nothing natural about the current market - it’s being controlled by an 800 lb. gorilla. As mentioned byTyler Durden of ZeroHedge on March 4, 2011, every single asset class correlates 1:1 with the Fed's balance sheet. Take a look at how the S&P 500 correlates perfectly with the asset purchases of the Fed.

“Extend and pretend” has bought the Fed time ( 2.5 years to date), and the ECB bailouts continue to buy the EU more time, but as Charles Hugh Smith said,At some point, the announcement of a new bailout or Fed "fix" will boost spirits and markets for a few days rather than a few months. At the very end of this process, the announcement of the next "fix" will crash the credit and stock markets because participants will finally understand that the fixes are only floundering, last-ditch acts of desperation which have zero chance of actually working.”

But until then...

Q: Where is the market going next?

A: Where does an 800 lb. gorilla sleep?

Good to see you back here. Great post!

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  #495 (permalink)
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jonc View Post
Tiger, it had been a long time since you posted. Do you have any strategy for the current market situation?

Not trying to be glib, but if we have learned anything since March 2009, it is that you can't fight the Fed and it's co-conspirators (Morgan, BofA, Goldman, Citi). They have turned the broader market into a "cartel commodity". They now have more influence over the market's pricing than OPEC has over crude oil prices, and even more influence than DeBeers has over the price of diamonds. Remember when the trading divisions of the above banks all had perfect 1st quarters in 2010, where they didn't have any losing days? What are the odds of any 4 traders on this board pulling off a similar feat? Until further notice, the market is going wherever they want it to. Along with making them hideously wealthy, it serves as the ultimate sleight-of-hand and mis-direction. It makes for an effective public realtions vehicle as it helps divert attention from the debased dollar and loss of purchasing power. Ironically, the worse the economy and employment situation is, the more incentive the Fed has to take the market higher.

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  #496 (permalink)
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Michael.H View Post
Yup, i saw we're down 1%, but thats not even near my NQ entry point.... Im gonna hold for now.. We'll see what happens tomorrow.

I really want to start scaling out on new monthly highs.... I don't want to sell down here.


Hi, has you status changed?

"Faith is the substance of things hoped for, the evidence of things not seen." --- "Therefore, I Believe it and I will see it. And every day and in every way, I am healthier, wealthier, and wiser."
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  #497 (permalink)
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Today's price action was pretty amazing. Some great short intra-day trade opportunities were on offer. Looking at the bigger picture, we had a wedge/double top pattern where price closed down and outside of the wedge. Additionally, price closed at the low of the day with someone dumping a ton of contracts right at the close. Pretty extraordinary.

This is definitely getting interesting. The US credit default swap pricing has to be shooting sky high by now with all the nonsense going on with the debt ceiling soap opera.

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ES and the Great POMO Rally-es-2011-07-27.jpg  
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  #498 (permalink)
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Private Banker View Post
Additionally, price closed at the low of the day with someone dumping a ton of contracts right at the close. Pretty extraordinary.

Heading into today, the S&P 500 had declined in the last hour on each of the last five trading days.


For much of 2011, the last hour of the trading day was actually contributing to the overall market's performance. Since the middle of May, however, the last hour of the day has gone from contributing to positive performance to dragging it down. In recent days, this drag has become even more apparent. As of Tuesday's close, the S&P 500 would be more than 3.5% higher on the year if it were not for the last hour of trading.*

*Courtesy of Bespoke Investment Group

The burning question is, does this represent a fundamental shift from risk preference to risk aversion, or is it simply a function of traders not wanting to hold stocks overnight with so much uncertainty in the markets?

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  #499 (permalink)
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tigertrader View Post
Heading into today, the S&P 500 had declined in the last hour on each of the last five trading days.


For much of 2011, the last hour of the trading day was actually contributing to the overall market's performance. Since the middle of May, however, the last hour of the day has gone from contributing to positive performance to dragging it down. In recent days, this drag has become even more apparent. As of Tuesday's close, the S&P 500 would be more than 3.5% higher on the year if it were not for the last hour of trading.*

*Courtesy of Bespoke Investment Group

The burning question is, does this represent a fundamental shift from risk preference to risk aversion, or is it simply a function of traders not wanting to hold stocks overnight with so much uncertainty in the markets?

That's an excellent point. It has become a common event for the ramp into the close until like you said, the last five days. That's a huge and notable statistic.

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  #500 (permalink)
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Wow! The ES just dropped about 14 points within a second in after hours trading. I assume it was the result of the house calling off the vote this evening. These markets are getting very sensitive at this point. They better not to off those HFT machines because we know what happens next.

Attached Thumbnails
ES and the Great POMO Rally-es-09-11-4-rangenogap-7_28_2011.jpg   ES and the Great POMO Rally-es-09-11-30-min-7_28_2011.jpg  

Last edited by Private Banker; July 28th, 2011 at 11:15 PM.
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