Actually, that includes a pretty good size of the rebounce. Didn't the bottom occured in the 2:45-50 timeframe? The 2:45-50 candle already has a 26 points bounce in it. That means some of their selling happened when the market was already in rally mode. If I am reading the candles' time right, they started to sell around 1128 ES and finished when it was back at 1182 or so and going higher. So unless I am missreading the time, it is possible they didn't make much money on the whole deal, actually, if they held onto it, they could be in the red....
"Waddell's response makes sense to Michael Covel, author of the bestselling books Trends Following and The Complete Turtle Trader. He has thought all along the huge sell-off couldn't be the result of one person or one trade. Covel says a more likely scenario is that one large trade could have triggered a mad sell-off that swept the markets down 10%. "Everyone is looking for a boogeyman in the trees to blame for this," Covel says. "It's just too big of a drop to be attributed to one trade, and it came during a time of wild market instability. Everyone was selling." The exchange's document hits on the same points. Quoting from the document, Reuter's said that during the sell-off, similarly sized trades came from Goldman Sachs (GS), JP Morgan Chase (JPM) and Citadel Group (CRGRF). The 20-minute sell-off showed 842,514 E-mini contracts were sold."
Waddell & Reed runs a very successful mutual fund called (UNASX). It's done a great job over the years of protecting on the downside, while still participating on the upside. Clearly a more actively managed fund that maintains the ability to hedge its market exposure from time to time. The fund has close to $30 billion in it, between it and the "clone" funds that it runs. So, if the assumption is that they wanted to reduce some of that expsoure, and they were willing to risk 50 handles on the spooz, you're looking at $187.5 million on $30 billion. What's that, not even 1% of total funds assets?? Just goes to show you if they really wanted to hedge up to a more reasonable extent (and who knows what their position was coming in), they could have tried to sell 750,000 e-mini's instead of 75,000. I wonder what that would have done to the market?
So to sum up, we got a major tank which caused the NYSE to light up LRP's pushing all the volume to electronic only exchanges. Some "bad traders" sell @ mkt down to .01 on a few stocks. And the Exchanges bail them out. Nice huh? I hope "daddy" exchange cancels my trades the next time I make a stupid trade. Pathetic.
This melt down was not in futures. Equities tanked and future indexes reflect the dip. The domino's fell when the leveraged ETF's joined the soiree. Tough for them to track with the meltdown and execute the trades required to maintain the 200% and 300% daily returns.
That might be so, but as I wrote above, how do you account for the subsequent 70% melt up? This isn't your typical short-covering rally and unless you have an orchestrated move (eg. collusion), this kind of V-shaped retracement is nearly impossible on a day of 1000-point drop. It just looks too damn phony!
I can only repeat my question that I have raised already dozen of times, because not the SEC, CFTC and other regulator are not raising it and the are not raising it for A REASON ( emphasis !!!!! ) : WHERE HAVE BEEN SMART ASS, "CLASSIC" MARKET MAKERS LIKE GOLDMAN, J.P. MORGAN, BOFA/MERRILL, CITI, MORGAN STANLEY, UBS, CREDIT SUISSE, DEUTSCHE SECURITIES, SOCIETE GENERALE AND OTHER during this melt down ? I can understand that HFT cowards have switched off their machines, because this market manipulators and professional front runners do what they always do when there is turmoil : sh.t their pants... But hey, can you imagine GOLDMAN not running an ALGO jumping in at a discount of 20 % for Procter & Gamble ? J.P. Morgan not bidding for Accenture at let's say 30 % discount - not to say a penny ? THE OBVIOUS CONCLUSION IS THAT ON THURSDAY NOT ONLY THE HFT BOUTIQUES SWITCHED OFF THEIR MACHINES, BUT THE LARGE PLAYERS TOO. Coincidence ????? NEVER EVER ! AND THAT'S THE SCANDAL AND THE BRAZENNESS THAT THE SEC HAS TO PROBE AND NOT WHETHER WADDELL AND REED HAS SOLD 75.000 Mini S&P contracts to hedge bona fide their positions ! Do yourself a favor and write Robert W. Cook, director markets and supervision and demand an answer where th fu..ing classic market makers have been THURSDAY 6 th of May 2010 : 'CookR@sec.gov' Have fun !
The answer was in my post above: "Reuter's said that during the sell-off, similarly sized trades came from Goldman Sachs (GS), JP Morgan Chase (JPM) and Citadel Group (CRGRF). The 20-minute sell-off showed 842,514 E-mini contracts were sold."" So they were obviously on the right side of the trades. My personal explanation is that the algos correctly read the market that it was in a sell off mode and they sold. Once the selling reached extreme values the algos correctly again read the market that it was oversold and they started to cover and buy, thus the big V shape... So no big secret, just the bots being programmed just right and they knew how to make money....