Thursday, April 23, 2009

Jam Job

I try to not be a conspiracy theorist but some days it is very hard not to. Today was one of those days. At exactly 2:45 p.m. the S&P futures market started to go beserk. On my trading screen it immediately caught my eye that the way the futures were trading was not normal. It was off. It wasn't just the surge in volume, it was the way they were trading. 10,000 contracts going at a time. Futures were jumping in half points and integers as the ask was getting hit. The markets were getting jammed.

At the same time XLF (the financials ETF also went beserk). Look at the volume pick up in the graph below. WOW!!

So the question becomes why? What caused it? Was it a computer program? Was it orchestrated between banks and/or the government? Is there enough to cause follow through?

All day you got the sense after yesterday's failed rally that the bulls were getting frustrated. Today we had another rally and it faded and it looked like the market was going to roll over. Someone, somewhere drew the line in the sand and said no way. Not today and the ask on the futures started getting pounded driving up the market with it.

Tomorrow I think is a key day for the bulls and the bears and the bulls already have an advantage with Microsoft and Amazon up after hours. The bears must hold 860 and the bulls must hold 830. Anything in between in the short term is a punt to next week.

No comments: