Today's reversal 1/9/2004

Discussion in 'Trading' started by chinook, Jan 9, 2004.

  1. This is from 1/9/2004 Yahoo Finance:

    Selling was most pronounced in transportation, basic material, and health care, and only intensified in the last hour of trading - when, according to sources, S&P sell programs triggered stops and a tier-1 firms placed puts...

    Can somebody please decipher for me what tier-1 firms are and what kind of puts they might have purchased. I would guess tier-1 firms are Morgan Stanley, Golman Sachs etc... The puts mentioned can these be S&P Futures puts?


  2. By equity-derivative desks purchasing put options on stocks and indexes for customers, the traders and market-makers who SOLD those puts have to sell S&P futures in order to hedge themselves.

    This "hedging" by market-makers obviously put pressure on the S&P futures, triggering stop losses at yesterday's lows, and encouraging further selling.

  3. Mecro


    It's called short squeeze of dumb money and the real players selling in the last 2 hours.
  4. Maybe the selling was a long squeeze and the real buying comes next week.

    Didn't think of that did ya!

    What they really do is squeeze it every which way and collect from the dumb money on both sides. Been working like that for , oh, 100 years?

  5. see the cubes go back to 37 or 36
    I can get a good entry point for the next move
    up :p

    no position
  6. This makes a lot of sense. Thanks.

  7. dgmodel

    dgmodel Guest

    shortsqueeze would be the opposite...