Is this program buying?

Discussion in 'Trading' started by roger2, Aug 5, 2001.

  1. roger2


    On both Thursday and Friday this week (8/3 & 8/4), near the end of the day, the Nasd comp chart turned decidedly north .

    I was not expecting this, especially on friday.

    was this program buying?

    or was it general buying pressure?

    I have noticed moves like this before, often in the last 30 or 40 minutes of trading. sometimes in the last 5 minutes or so. a couple of times i have seen the chart move north in an almost vertical line for a few minutes, even more obvious than the two examples this Thur and Fri

    how can you know when program trading is in gear?

    and if/when you identify program trading, are there are clues to tell when it has stopped?
  2. Dustin


    Many times you can get clues to what's going on in those moves by listening to a S&P futures pit feed. The moves often start there. Usually if a large buyer appears in the crowd the announcer will tell you who it is and what they are doing.

    You can get free trials to these services at: (I subscribe to this one)
  3. The move on thurs was large qqq call buying by some fund. He was taking large large size, and it gave the tape a lift. Funny thing is that he punted all those calls for a nice loss into friday's open, hence the tankage we saw.
    As an added thought, it have also been a hedge on that pmcs add. A lot of players were probably playing the arbitrage in the pmcs add and were short the sp (-pmcs) and long pmcs. But the direct reason for the move up was large 6 fig qqq call buying.
  4. It's generally not difficult to know when buy programs kick in ---- both e-minis (ES and NQ) start to show wild jump ticks upward, leaping across several levels on a single flash. More useful would be to know in advance when they are going to hit ---- I've never tried it and they charge a very hefty fee, but purports to use 20 years of computer analysis and various complex algos to offer continuously updated odds in advance of the chances that program buying will surface at any given time throughout the day.

    When is it over? There's generally a quick spurt of obvious profit-taking which means at least temporarily that the programs have stopped. (But they can always pick right up where they left off ----- if you happen to be long, it's usually best to hold your position at that point, until there's a clear downtrend in effect.)

    As for futures action in the last 5 minutes or so (4:10-4:15ET), assuming it's not a reaction to news, many big players wait till the last minute to establish overnight positions, and jump in just before the close. Incidentally, when the S&Ps close significantly above or below fair value at 4:15, it's an excellent sign of the bullishness or bearishness of the *smart money* ---- probably 75-80& of the time, the next day's action is skewed in the direction indicated by those final ticks.
  5. tymjr