Rally on IBM/Oversold

IBM helped the market in a big way today with a +5 dollar surge. Good new on earnings still leaves the beamer with over a 15% decline from the October 11th high. Lots of work ahead for the buyers. Indexes had a fairly quiet day in contrast to the 1 minute 23 point rally in the sp500 index futures at about 2 am est. Otherwise nothing notable about the overall rally today with values still needing an upside push to change the current downside dynamic.

Program Trading

The natural evolution of the ever expanding volume of electronic algorithmic trading and present economic conditions has helped to create an extraordinarily volatile daily price action in stock indexes. The art of designing trading programs which will provide consistent returns in deep markets has been the goal of program designers from both big and small operations. Skinny markets have always attracted strategies to search and capture improperly priced instruments, stocks or indexes. These 'parasitic' programs last until the proper bids and offers relative to surrounding instruments take hold. The other downside of skinny markets many times is that they often times are used as legs of protection spreads which become problematic when market conditions change rapidly, (LTCM and Subprime).

So trading well in deep markets has allowed the proliferation of volume programs pushing bids and offers about and making entities such as CME Group extremely profitable. But it is harder to trade well with size when prices moves a bit faster. The adaptability of a particular program's decision logic is tested in markets of unique volatility as we are now experiencing. Across equity indexes, financial instruments, and now many commodity market electronic trading platforms, tremendous movement is revealing both opportunity and risk for trading programs.

The speed of price also decreases the duration of down-trends and up-trends. Events unfold and are adjusted to rapidly in the transparency of price action and ultimately cut the time adjustment. The bears looking for to a sustained downturn given current stock action may find two possibilities; (1) a large break will rapidly unfold forming a bottom quickly or, (2) the break is about over.

The given is that most banks and underwriters have failed to understand, evaluate, or audit risk well. Successful trading programs lead in analyzing risk quickly and efficiently. Electronic markets react to those processes and are better off for it.

Duck Bernancke

The bear's life is one of ducking financial stimulus news from various sources. Bernancke, known as Mr. Accommodation, told the traders today he might release the rate bomb at any time. Now the bear has enough to deal with when illiquid rallies continually harrass, but the deafening sound of the whining of Wall Street affects the bear's position the most. The Fed hears these noises and worries it has not figured out the proper remedy for all that ails the US financial markets. So now the Fed has decided to reveal ahead of time it's intentions to reduce, probably by one half in January, and continue to use other influences if needed. This action puts the pressure on the bulls to perform and to avoid the resulting fear that may occur should any sharp sell-off reveal some exceptional underlying weakness. The bears will have to gather in the corner of the room and rush the market if opportunities present themselves, otherwise, keep ducking.

No Bear Today

DJI, SP500, and NQ100 staged reasonable rallies today though it will not convince the bears that it was anything more than a pause. Lower lows across the three continue to be the norm. Market has played the last two days staging a value area only to run from it in the last twenty minutes. Look for the same chop action tomorrow.
Tags Sp500 1405 1494 NQ100 1945.5 1928.5

Bear Showdown

The bears showed up today after getting run in last yesterday and early today. Though not officially a bear market, despite what CNBC is saying, it is oh so close.Some blame has been placed on the uncertainty of political season but the current administration along with the banking problems leave enough ugly for all. Now the market is spooked and nervous about a total bath but lack of follow-through will bring quick illiquid rallies.
Tags SP500 1419 1402.25 NQ100 1940.75

Choppy Action

Markets were mixed on light volume in an almost illiquid action capped by a substantial rally off the lows twenty minutes prior to the close. Bears continued to score as DJI, SP500, and the NQ100 slumped into new lows for the current move. Fed speak will be a part of the week's trading environment.
Tags SP5oo 1420.25 1418.25 NQ100 1974.25 1963.75 STI(Down)

Bears on Verge

Orderly retreat on the break with the bears on the verge of a downside confirmation in their third attempt to close the indexes in technical jeopardy since August. They have worked hard for a long time and have the Dow Transportation Index providing evidence of recession. But we have been here before and each time the bears have failed to hold the market down. The trading action of going down' bid ' continues to indicate the presence of buying interest from cheap dollar beneficiaries. The NQ100 has had a particluary tough time this week as it continue to retreat from solid action in 07.
Tags SP500 1427.5 1423.5 NQ100 1989 2015.5 STI D

Testing NQ100

Bears riding the liquidation train in force, trying to ride the NQ100 into and through the November lows. Volume not huge, but painful enough for the bull.

Bears Pound Early

Jobs number giving bears some life. Dow Jones Index needs to close under 12743 to confirm the downside. Market down hard but selling pressure as of this post is light.

Waiting for Jobs Number

Market traded with little action today waiting for tomorrow's job numbers. However the NQ100 futures staged a late surge. Volume in stocks has been less than usual and the CME has been pounded a bit as many expect to see diminished transactional income as trade activity falls behind the three month average.
STI (UP)