Discussion in 'Index Futures' started by FuturesTrader71, May 6, 2005.
Non Farm Payrolls
Well, I do get up early. But according to my shorts ---it moved quite a bit after the NFP as well. It collapsed! The Euro futures can also move alot in the evening hours during the Asian openings.
edit: You said PST!!! Get your ass out of bed! That is 8 am out east. You are a lazy f@@k#ng trader!!
Wonderful : ...and technically, it was clear that a major market top was in place.... Technical analysis has become a proof. I love it.
All in all, a very good text to have a good laugh before a fresh beer at the pub. Thx again.
Maybe the last hour will be interesting.
to be honest, i dont believe in baclk helicopter theories but I think the govt props up the market, anyone watching major indexes notices how they dont trade (ie breakdown) like many other instruments. (ie they move differently).
But more importantly, its cheaper for US govt to prop up the market. Why? Think about all the negatives when the market goes down, all the corps with unfunded pension liabilities go up (cause they invest in the market), business confidence goes down, etc etc.
I think its cheaper to prop the index (not necessarily to go up but to keep them from going down) than the lost tax revenue for the government associated with less employees (ie if they fund their pensions then they cant hire), etc etc. think about all the taxes the government loses when business slows down.. its so much cheaper to prop the index.
Which I think is what soros talks about in terms of reflexivity or whatever.. that basically the market is no longer a measure of society but part of it (ie the index is supposed to measure society but rather the index tells society how to behave)
I noticed in the last slow down for example, that bankers are much more conservative when the news is "market is falling", not only in lending standards but also in terms of holding people to covenants.
If I were the goverment, I would prop the market because its cheaper from a tax revenue basis than to have news every nite that you are losing ur ass to joe public and middle america.
Plus, its just not politically correct to have a down market
notice that ec smashed to a stop at the daily support level. it just made its move in one go.
it used to do that kind of distance in a few hours or so, giving everyone a bit. guess everyone just anticipates it now and off loads in one at the top and be done with it. viva automation.
hey - if i had enough cash id just dump it in the market untill it kicked off the automations and let them do the rest for me.
is there a big vault someplace where the government stores all these contracts it buy while propping up the market? the ppt has been rumored for years now. they must have a big pile of stocks someplace that they buy when they prop up the market.
well, what do you use to BUY futures. US Dollars, and guess who prints those?
Whether you run deficits, or store assets demonated in USD its same thing. (Since you can print as many USD as you need == same thing as deficit). So, in truth, yes the government could store "stock" or any other items (like cows, tho I suppose you ahve to feed them). Its effectively deficit spending.
However, as a government because so much of the tax revenue is affected by the stock market (in terms of spending & consumption and since we are supply side...) its cheaper for them to hold tons of the top 20 stocks (really, if you wanted to manipulate you only really need to be buying a handful not every stock) and prop them versus the losses due to erosion of consumer/business confidence -> less hiring -> less spending -> much less tax revenue.
If you look at the tax receipts they dwarf the average daily volume. Plus, you dont have to buy THAT much until the market players like ourselves jump in.
More importantly, the working group was supposed to prevent crashes like 1987. Anyone who knows how markets work is that for markets go lower you need everyone to panic at once thats why you get those sharp legs down in a downtrend with the big volume, its the longs capitulating (on whatever timeframe you are watching). By the government preventing the panic from getting the price to proper levels, my feeling is that ultimately it wil lead to a monster crash since over time we will get farther and farther away from sustainable value (ie the downward pressure would be great enough that even the govt couldn't prop). This is an unlikely scenario so I think its more likely that people eventually figure out that stock market is scam and it loses its ability to control to masses (ie regardless of what happens ppl become apathetic towards it, because it will keep telling people that eveything is wonderful yet ppl can see they arent). At that point, it will probably return to what it should have been.
And, as a trader you shoudl knwo that p/e whatever doesn't matter. Other than the short side, EVERYONE in the market has a vested interest in it going higher.. so its not about being a 'open market' its about a casino and the belief that 'everyone' can win. AND when was the last time that happened? NEVER. (Plus, what if the P/E returned to its low of say 6 (dia i think) and stayed there for 10 years. does that mean 6 p/e is "fair" now? or is it 25?)
Of course, then we have the ET crowd that mock anyone who has a brain or is at least thinking..
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