I love the HSI too! I recently made small fortune on Cheung Kong put warrants. I think there is a degree of short term manipulation of the market by certain funds. This sifts out the bad traders from the good ones. It is survival of the fittest in this game. He who wins gets to chat to Maria Bartiromo, the losers chat to the McDonalds drive thru- girls.
"Too simplistic my friend. Who is buying those contracts on the 'down volume' ?" here's a hint for you. institutions tend to buy weakness and sell strength "Or do they go into a large crate , warehoused for later retrieval?" contracts are simply agreements. the nature of futures means that every long has a corresponding offsetting short.
No this is VERY NORMAL price action for a Friday end of day......... http://www.charthub.com/images/2006/12/01/ES_317_VB_11.png Remember when you OWN a really nice car, you have to park it in a safe garage when you are gone for the weekend. 1387's would have been way too low for the weekend.
In a bull market, mutual funds are not going to sell, they will hedge their underlying positions using futures and options. They must be in the market because the alternatives will leave them underperforming if the market rises and redemptions will happen if they are underweighted and underperform on a good year.
tbh, this post reeks of a frustrated short that is either getting squeezed or taking tons of papercuts shorting and stopping out.
Heh. Its funny. We get some volatility coming back and all of a sudden conspiracy theories abound. "I'm getting chopped up dip buying !!! The guys in the black helicopters must be doing to MANIPULATE the market !!!" I guess I'll give my rampant speculations on to whats going on, since everyone else is. First off, it feels like we're getting some genuine selling coming into the marketplace since thanksgiving. It used to be that everytime we got good news, the ES would tear up, and everytime we got bad news, it would stay flat. This week however, the market got crushed on both Chicago PMI and ISM. People are starting to react to bad news, and we are starting to see some actual selling coming in. However, the omnipresent dip buyers are still out there. On the way down today, there was a candle setup that looked like the usual setup for the ES "Dip buyers put the brakes on the selloff and tear he market up." Which, while we eventually went down, the buyers were out there. Frustratingly, I lost (simulated)money selling the whole way down, but getting caught in the chop ,but THAT'S another story. Finally, in addition to the above action, it looks like open interest is starting to build on the march contracts. So we have the Rollers in too looking for favorable prices. So, thats my theory. Dip buyers meet legitimate sellers meet the roll to create a volatile ES experience.
I have a question for the more experienced 'traders', who have actually worked in a trading pit. Every few days, I hop into this insane stock EFUT when I feel like giving myself some serious stress (and YIPPEE! type of glee). It's like clockwork. It goes down 3-10 dollars, it goes up 5-10 dollars. So off of EFUT alone, I've doubled the limited amount of $$ I'm willing to totally gamble within the last 2 weeks. It's the craziest thing I've EVER SEEN, since the days I play with it, I watch each tick for hours on end in total bewilderment. What happens is, the ask and bid prices almost always have only 1 lot. And it seems like really minimal demand, but it happens so often in a day that it racks up. You'll see one bid for a price that can be as much as .25 away from the ask, and the ask can be .50 away from the price, and boom, it's up that .50, then it's up another .50, then down .20, then down .25 in the space of 4 seconds. Between the time I pulled up a trade window and hit that sell button (and no, I'm not slow or spastic), it moved $.80. Then it will sit there with this wide bid/ask for sometimes 2 or 3 MINUTES, and the cycle starts up again... most of the time with only 1 lot on each side. Watching it do that, I was terrified to enter a limit order, because if 'they' could see it, that would allow them to move it the other way. I have never seen any other stock behave quite this way. It's like playing a game of chicken with money. This thing swings up to $10 nearly every single day, but there's definite 'break' periods, where apparently, no one is manning the 'booth' so nothing happens. Is it possible for 2 people to sit next to each other just playing with the stock prices? Because that's what it seems like from the way it's moving. If they didn't have to pay commissions, couldn't 2 people just sit there buying and selling from each other til they hit a given price, then start buying and selling their way down til others join the game, and they can start playing it down again to pocket the difference? Since they'd be mostly buying and selling to each other, they don't lose anything, what one loses, the other gains and vice versa. If that's remotely possible, why can't all individual stocks be manipulated that way? I don't know when the good times will end with this stock, and if everyone hops on board, it may just crash back down to $6 so they can pocket their money and walk away if that's what's happening. I never thought the market was manipulated before seeing this happen, but now I think it can be. CAN it be? If commissions left the picture, couldn't ANY 2 people do this with ANY low volume stock to get other people to play?