Friday's rally - short covering?

Discussion in 'Risk Management' started by themickey, Mar 14, 2020.

  1. themickey


    Friday on ASX saw a massive stock rally which initially started the day falling hard, then the last 3 hours rally hard, it was a 13% day from lows to highs on the main ASX bourse, XJO.AX.

    USA was similar, but not quite so violent, nearly 9% on S&P 500 from bottom to top for the day.

    Was this mainly the result of short covering prior to the weekend do you think?
    KCalhoun likes this.
  2. themickey


    Now should the market turn down again and shorts wish to enter the fray, we are in for a doozy dump.
    KCalhoun likes this.
  3. traider


    The Fed has cured the virus with money
  4. KCalhoun

    KCalhoun Sponsor

    Dead cat bounce algo short squeeze, will be interesting to see what happens Monday. Went mostly cash into weekend since unpredictable swings

    Likely rally mon tue to suck in wannabe dip buyers, possibly up into wed, then virus headlines take it back down end of week

    I would be surprised if buying continues into Friday

    Main play is oil bounces OXY UWT etc and gold eg JDST vs NUGT
    Last edited: Mar 14, 2020
  5. That and the fact the most rallies start with short covering.

    Considering this/any rally to be short covering usually is of no value. IF a bear market has started, you might expect this "short covering" rally to go about 500-600 points in the S&P. It already did about half of that Friday. And of course we'd all like to capture a "piece of 600", short covering or not.
    FriskyCat and fan27 like this.
  6. hopefully it’s not just short covering or fed buying
  7. zghorner


    news this weekend will make or break the rally. I imagine Monday starting green then going red but Trump is the absolute King of all bear fuckers so if his speech comprised almost entirely of bullshit turns things around i wont be a bit surprised. I will also be divorced and moving into a cardboard box behind dollar general shortly after that...

    Of all the puts I am holding the oil and gas ones are the most concerning. If the market turns south again do you all think the O&G sector will follow suit even though the US will be buying oil to "Fill Up" our reserve???
  8. southall


    There are 3 forces are play:

    1. Short profit taking
    2. Short loss taking
    3. Long buying

    What percentage of the buying was caused by each is anyones guess.
    Scataphagos and KCalhoun like this.
  9. 4- Working Group on Financial Markets (aka Plunge Protection Team)
    FriskyCat likes this.
  10. Ayn Rand

    Ayn Rand

    Friday from about 3:30 PM EST till the close was helicopter money - plunge protection team.

    Trump gives a speech starting at 3:00 PM promising to spend the moon on almost anything you can think off. Did like the oil buy.

    There was a little head fake at 3:32 PM.

    After that it was an impressive display of how to run up a market. Almost every order was a market order and every min or so the bid - ask was raised.

    They did this the week before on the close but started a little late. A very large amount of buy orders didn't hit until a min or so after the close. Helped the stocks after hours but not the indexes.

    FYI - Hank Paulson told me once - "With mark to market, the fastest way to print money is to prop up stock prices." With mark to market every $1 increase in a stock is multiplied by all outstanding shares. It is a very neat trick. You can spend a million and create a billion.

    Hope everyone got there fair share. It was free money.
    #10     Mar 14, 2020
    .sigma, zdave83, Clubber Lang and 2 others like this.