the CME probably will be adjusting the low tonight to $656.00 for GC ( April 2007 ) ... thats not perfect ... but I guess within reason CBOT .. not sure what they will do yet for YG ( April 2007 )
How can it be adjusted? The 650 print happened before the ECBOT open. What makes you think the trade will be reversed when they are the only market open at that time? I mean when there is no liquidity in the overnight market and there is a huge stop out there, there is the risk of getting a divergence between the cash and the futures. It's part of the overnight market. If you dont want your stop to get hit at these extreme situation, why not choose the only trigger during regular hours option. If all trades that are away from fair value gets reversed, what is the integrity of a market place. Why would arbitrager step in if it will eventually get reversed? If you think they should reverse the trades everytime the cash and futures get out of whacked, they will need to do it every minute when the ES diverge from the Cash S&P.
they did what they could ... heck in my opinion they should have raised the low a few $ higher than $656 basis April 07 the only people who lost out on this are those who bought the low prints and held for the bounce the people who were stopped out with major "slippage" got some of those losses back ... hopefully not too many people have been getting "wiped" out when these events occur
I just dont agree with the adjustment. People who come in to provide the liquidity for those stops are taking on huge risks. Remember this futures game, at some point everyone will need to take the opposite side of their original position except those who intend to take delivery so the price in the futures just shouldnt be compare with the cash. In the book markets in profile Dalton says every tic in the market has a reason. When people need to balance their huge inventories they need to pay a price. That's is also why some people dont like to go home with a position. There are millions of ways you could avoid situations like these by adjusting your trading style. If you were to take home the position and leave your stops in, you face this kind of risks and should be part of the cost when evuating the trade at the beginning. Let me ask you again, if we were to open at 630 tomorrow at the open outcry open, would u be glad they honor the stop at 650?
maybe they could have kept things as they are except maybe they are more concerned with keeping customers "solvent" rather than a few arb's myself included from making every last dime
I just found the exact quote. On Markets in Profile P.142 "Pete Stedlmayer best dismissed the concept of noise when he said that every trade occurs to satisfy some coniditon of the market. This remains my belief today. For example, if a market rallies quickly and just as quickly retreats, it may well have done sobecause the market got too short or said another way, the market got out of whack in the short-term inventory has to be rebalanced."
funny ... I guess mr "market profile" was right in this case as "mr market" proceeded this am to touch the lows ( pre-adjustment ) made last night in GC !
the CBOT/CME merger has nothing to do with GC/ZG at all actually. CME has an agreement setup with NYMEX to trade COMEX gold/silver on the CME globex electronic platform. Same with QM NYMEX mini-Crude. For those that may be new to trading gold/silver in the electronic marketplace, you should become very aware that stops are run constantly and the risk of getting stop filled at a price much further away from your expected market fill price has a strong possibility of occuring, especially at sensitive S/R areas..