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brownsfan019

ES Limit Up?

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So... we opened, then sold off? I was at work the entire time watching from my blackberry :crap:

 

attachment.php?attachmentid=8026&stc=1&d=1221872360

 

Look at that weekly high wave candle and HUGE volume. Throw on a weekly chart and compress it as many years as you can go back, it's unreal! Gotta love manufactured bottoms :roll eyes:

 

 

attachment.php?attachmentid=8027&stc=1&d=1221872360

daily.jpg.a7867789511f6446a12ae73bb5eed248.jpg

weeklywth.thumb.jpg.42e3237a7e4a3a2dbd35e9c2dce95943.jpg

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That's what happened James. The market opened at 930 and there was a big run up that did not last long and then came down swiftly. I can only imagine what it was like holding through that. First, your dom just stops taking orders. Then, you sit there wondering... And then at 930 it's off to the races.

 

It was very interesting to watch as this does not happen often. Some pretty significant news event would need to occur to see this again.

 

Very worthwhile being in front of the computer this morning to watch this in action as it unfolded.

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Yes, limit up into the open.

 

I had so little sleep this past week. The news came out in the Asian session. Before you know it you're trading Asia, then Europe, then US, then Asia opens again . . .

 

The move in the ES was nothing compared to other markets. Shanghai nearly hit limit, almost made 10%. Hang Seng rallied over 2,000 points.

 

The fed isn't protecting investors, or the public. They are just throwing money hand over fist into day trader's hands. :rofl:

 

Edit: I must admit, it never ceases to amaze me the levels to which the US Government goes to, to absolutely rip apart the US investing public. Nearly all of these announcements have been done outside the day-session of the US market. Imagine being a fund with a weekly / monthly outlook. It would be fairly difficult.

 

Friday was a great example. Asian traders have benefited most from these moves. US day-session opened, they took profit and that was basically the end of it.

Edited by smwinc

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....... I must admit, it never ceases to amaze me the levels to which the US Government goes to, to absolutely rip apart the US investing public.

 

Not true. It goes to such levels to rip apart US DAYTRADERS. If Ma and Pa Kettle were sophisticated enough to understand money can be made when stocks fall, the Government never would have done what they did.

 

You don't seem them rushing in to halt long buying on 445 pt up days, do you?

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Sorry, that is just incorrect. Retail daytraders aren't the problem that regulators are concerned with. Basically (assuming you are a daytrader) you don't have enough capital individually or as a group to make much difference. The concern is for commericial entities (hedge funds for example) that have access to significant leverage and move size in the markets on a daily basis.

 

Simply put, the change in rules is meant to give the markets a break from the constant short pressure put on the financial sector by these groups. During that time, the government will try to fix the problems and keep the economy out of recession. Remember that we have an election in just a few weeks.

 

Much of this is simple common sense. One assumes that a professional participant could think this through and determine how and when to put on a position that would profit while managing risk appropriately. The same cannot be said for the general public (or daytraders for that matter). That is why in the industry, daytraders and the public at large are known as "weak hands" and "dumb money"....

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Sorry, that is just incorrect. Retail daytraders aren't the problem that regulators are concerned with. Basically (assuming you are a daytrader) you don't have enough capital individually or as a group to make much difference. The concern is for commericial entities (hedge funds for example) that have access to significant leverage and move size in the markets on a daily basis.

 

Simply put, the change in rules is meant to give the markets a break from the constant short pressure put on the financial sector by these groups. During that time, the government will try to fix the problems and keep the economy out of recession. Remember that we have an election in just a few weeks.

 

Much of this is simple common sense. One assumes that a professional participant could think this through and determine how and when to put on a position that would profit while managing risk appropriately. The same cannot be said for the general public (or daytraders for that matter). That is why in the industry, daytraders and the public at large are known as "weak hands" and "dumb money"....

 

You are making an error that they want you to make. A Day trade is by definition a trade that is entered and exited on the same day. Therefore if you enter a trade in the morning and are flat by the close you have made a day trade. If you make a day trade you are a day trader. How big your account is has nothing to do with it. Simply, there are many well funded institutions that make day trades and thus are day traders.

 

Most Mutual funds are not day traders they are investors (holding periods of months if not years). As such they tend to be LONG ONLY. The unsophisticated public mostly places money here. And because this they don't understand that money can be made when the market falls as well as when it rises. Nobody called the last two days PANIC BUYING......

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Well, this is my profession, so it is unlikely that I would make a mistake of that kind. If you re-read, you may notice that I talk about "retail daytraders". I try to be very specific about who "they" are.

 

Finally your conception of what is happening is likely to be incomplete. The events that have shaped this last week in the financial markets have happened largely out of the public's sight, and are related to the problems that institutions have had managing risk associated with holding of commercial paper originating from Lehman (and others). I can talk more about it if there is interest. OR not...

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Sure, first I am not interested in having you change anything.

 

As regards my comments I stated what I know, and that is that institutional markets out of the immediate view of the public have experienced turmoil.

 

What I can say in a public forum is as follows. Institutional market funds (not open to the general public) were caught holding commercial paper whose value was questionable. That paper originated from Lehman Bros and others and to those of us in this business it is incredible that a short term fund manager would take that kind of risk. But they did, and it backfired on them causing that institutional fund to experience a breakdown. In our business, this is called "breaking the dollar" meaning the net assets of the money market fund were no longer dollar good, but in fact were worth slightly less than a dollar. The repercussions of this were noticed immediately since it is extremely unusual for this to happen (I can't remember the last occurrence). The fund closed operation and for a time commercial entities with assets in the fund could not redeem...Although there is more to it, government regulators immediately noticed this and acted to avert what used to be called a "crisis of confidence" that would have spread to the larger market. What you may notice starting on Monday, is that part of the program the Treasury is working on will in essence offer some guarantee to cover losses that could affect (public) money market funds.

 

In terms of politics, this is an election year and if the present administration were to let the problem run its course without intervening, it would have given the election to the dems....

 

I will leave it at that.

 

Good luck to you.

Edited by steve46

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Sorry if I came across as if you'd change anything. I simply meant nothing I learn fundamentally, would change the way I trade technically, I simply meant I like to learn new information on current events, etc. Hope that clears it up.

 

On the other hand, what do you think this will mean for regulation surrounding CTAs and hedge funds?

 

And by an institutional fund that "broke the dollar", are you referring to LEH or other firm(s) that don't hit the headlines? I'm sure over the coming years there will be books and more information leaked.

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That is why in the industry, daytraders and the public at large are known as "weak hands" and "dumb money"....

 

We may be weak, but we are not dumb.

Steve 46, go back to trading. :crap:

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No need to apologize James.

 

"Broke the dollar" means that the institutional money market fund (that I referred to) did not maintain sufficient funds to respond to demands for redemption.

Edited by steve46

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We may be weak, but we are not dumb.

Steve 46, go back to trading. :crap:

 

 

I didn't invent these euphemisms, but I can tell you that time after time, they are proved correct. As an example I often fade signals at the daily pivot, and I do so because time after time, retail traders prove to be "weak hands" that get flushed out of positions easily. Even when retail traders use stops, they are positioned so obviously that it is easy for professionals to trigger them. For retail traders, I suggest that instead of taking it personally, they try to determine how professionals approach the markets, and try to trade more like they do....

 

Good luck to you

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Steve46,

No offense here. You may well have the right ideas here, but did you ever take Economics 101 in college, because you have a funny way of explaining things.

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I understand entirely. I was trained in a specific way. Its possible that we don't have enough in common to communicate. Fortunately there are plenty of other points of view for you to evaluate.

 

By the way, I should clear something up....I don't think of retail traders as inherently "dumb"...Clearly however, retail traders are prone to making dumb decisions when it comes to trading. I think the same is true of the professionals who allowed a money market fund, a short term fund at that, to own commercial paper from Lehman, that was really incredibly dumb (and irresponsible)...Clearly retail traders aren't the only people making dumb decisions these days.

 

Good luck

Edited by steve46

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