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Another interesting day today. One thing I would like to reflect on before I close for the day is the amount of volume transacted at 275. I'm on my phone and can't verify my suspicions, but I think we did just over 100million in volume today and more than half of that occurred at the low. That smells rotten. Like re-distribution. I'm sure everyone will be primed for another slide tomorrow but if this buyer sticks at 275 like he did today, there's nowhere to go but up. Always wednesdays and Fridays someone is bullying the market for options expirations, so maybe tomorrow the buyer will have dropped. Time will tell.
That's all for me.
Hi,
By 'redistribution' I mean exchanging one position for another. For example, let's assume I sold 10million shares at 280. At 279 I held the market down and sold another 10million. 278, 277, 276 I keep holding and selling. Then, I look for a place where I can liquidate into (like a gap up at 274.50), where I know there's going to be a lot of momentum, and that's where I stagger all of my buy orders. So when everyone else is selling, I'm covering my position and buying back in. To help me buy into a bigger position, I will keep 'selling' in strategic areas to attract more selling interest from others, kind of making it look like the market is cornered by a seller, with the intention of buying more than I sell so I can build a bigger long position. That kinda looks like what we saw yesterday.
Regarding your other question, Wed and Fri are options expiration days for the SPY, there is often a lot of unusual activity where the market goes places no one seems to think it will go because someone with really deep pockets buys all of the out of the money calls or puts and then drives the market up or down to the strike price thereby bullying the market. Usually you can tell if this is the case because the next day, the buyer or seller has disappeared. Yesterday, someone defending 275 had really deep pockets, it costs minimum 5billion dollars to hold that level, and they definitely had an agenda, I just don't know what it was. With the selling on the tape, it SHOULD have gone down. But it didn't. So either someone was defending an options strike price OR they were redistributing their position and are now net long. And if there's someone net long 50million shares, that's a concern, if not a directional prediction. If we test 275 again and fail, I guess I'll know the answer.
Welcome. Yes, well 5 billion is just relative. If you're a central bank, then asset purchases are just numbers on a balance sheet that aren't necessarily debited which you can accrue to infinity should you desire because you can print money to pay out your debts, as though a central bank can even have a 'debt'. And if you're a standard big bank, then you have margin and lines of credit based on asset value which run into the hundreds of billions. In other words, it's not like you need 5 billion cash in your account. However, even banks gets caught with their pants down from time to time when a market goes out of control.
After the market failed to take out yesterdays' low this morning, I got bullish, thinking the re-distribution scenario was the most likely. Here are my trades so far today:
Long 2755.5
Out 2754.5
(loss)
Long 2755.25
Out 2761.75
(win)
Long 2761.25
Out 2765.5
(win)
Now I will practice sitting on my hands until I see another opportunity.
Do you see this kind of action in the spot market? eurusd for instance? Id imagine it would be a lot harder to bully and soak up such volume on the most liquid cross.
I guess it would depend on who's defending the position. A central bank or government or group of allied nations would have a shared agenda and vested interest in defending or devaluing a currency, so soaking up volume and 'holding' a market wouldn't be a problem in that case.
On a day to day basis, large individual speculators can certainly change the psychology in a currency by giving it some gas at the right moment or holding a level. I think this has been documented in the past as being factual.