Another post from spydell. Interesting point of view of the author.
In the history of the US exchange, the last couple of weeks was the most sinister and powerful exit from long positions., if you look at trading volumes, even slightly surpassed the worst week in 2008. By the way, when looking at volatility, it for 100 it was only 3 analogue. This is the 30s during the Great Depression, this 87 during the famous stock market crash and of course 2008 year, and according to the frequency of intraday fluctuations only 2008 the year can be compared. Just like that!)) By the strength and speed of the fall again 87 year leader, a few days in 2002 And 2008 and now august 2011. In a couple of weeks, at least 7 trillion dollars of world capitalization of stock markets, many markets have broken records for the fastest drop and hit troughs with 2009 years - the same CAC40. Therefore August 2011 - this is a historical event and remember this time for a long time. As a matter of fact, August 2011 this is the most significant exchange event for 50 years! What drives investors, which are not encumbered with margin obligations, dump shares?
I would highlight 3 Factor.
1. This general depressed state of many investors и у некоторых, even on the subconscious there is a feeling of the coming storm, worries about the future. Such uncertainty, uncertainty about the future. Blurred prospects and fears of a second wave of the crisis lead to the fact that, that at the slightest breath of breeze they are ready to part with what they have acquired quickly and without hesitation. Ie. no large buyers in the market, apart from banks. No them. No one to buy out the market. Either there is no money, or be afraid to take risks, or discarded as soon as possible. Before, years 5 were calmer back.
2. This liquidity bubble. Ie. such a powerful fall of the markets, basically, confirms the thesis that, that the growth of markets in these 9 months was based on monetary factors and did not have a fundamental basis, as opposed to growth, for example, in 2004-2006 years. Bach, the flow of money ended in the system and the bubble burst.
3. Growth in the share of algorithmic systems, robots and short-term speculators, which, although they do not form a trend, but amplify the movement.
well, and now, main! I have long wanted to discuss one topic and clarify. Maybe, many will pass by and forget, and for some it will format the brain in full))) so, понеслась!
The public's attitude to the topic of manipulation in financial markets gives me shock and awe. I'm somewhat surprised, when I see with my own eyes, when smart, adults and seemingly adequate people put a reinforced concrete barrier in front of this topic. Declare taboo, ban on any conversation, financial system manipulation. Even those, кто умом понимает, that it is possible and acceptable, but still hesitates to show it to the public. Even Yegor Susin, as the smartest and talented economist and analyst in Russia, he still tries to omit this topic. The fact is, that the general public does not accept it. And in the scientific community, even more so, besides, they may be mistaken for a madman, who is seriously talking about something, which contradicts classical economic laws and axioms. So I do not even advise you to try!))
Usually opponents of manipulation boil it down to, that before people could not explain some natural, physical phenomena and everything was reduced to deity, mythology, and now imperfection in knowledge and understanding of what is happening is attributed to the puppeteers and so on.
There are no gods, there is money and power, and now everything is in order!))
But if you consider this issue from a philistine point of view, it turns out to be a funny incident. well, for example, you will not argue with that, that there are drug dealers, проституция, arms business, в конце концов, – коррупция. Уж кому, and the Russian-speaking reader is more familiar with the topic of corruption, what is good and enough facts, as in the words of friends, and on my own experience. Никого, for example, не удивляет, how a gang group can control a district or local police station, surprises no one, how officials can cover up open facts of cheating and theft of state property, and so on. You ask, why all this written heresy? You are not surprised and you are used to it, what do you see with your own eyes every day, but in the above examples we are talking about millions of dollars, миллиардах, and in the case of drugs, tens of billions of dollars, but the financial system is more, than a THOUSAND times more than all of this and requires other methods of exposure and control.
Banks can be divided into traditional, консервативные, which profit from the issuance of loans and commissions on payments and transfers, and there are banks, which exist due to the distribution of money in the financial system and this distribution is their business, their territory. It would be naive to consider the system "clean" and "law-abiding", where the volume of liquidity exceeds tens of trillions of dollars, excluding positions in derivatives.
Yet again, the challenge for the largest banks is, to legally develop, implement and operate a mechanism for the successful distribution of liquidity, which does not formally belong to them. The only profitable instrument, not including credit margin and commissions – this is an investment unit, which, in turn, are divided into dozens of directions, starting from arbitration, conservative investments, combining strategies for options and futures, ending with overly risky positions and playing on exchange rate differences.
Considering the size of the banks, then they do not have the opportunity to trade according to the methods and principles, which are applicable to all other participants in the system. Basically, markets are now liquid enough to, so that any fund can enter the market with minimal slippage in the shortest possible time. This is applicable for the fund, which operates with the sum of 1 to 10 billion dollars per instrument or market segment, but not applicable for those, who has several orders of magnitude more money.
If the largest investment banks followed the widespread trading paradigm, according to which grows-buy, falls-sell, then they would always, I emphasize - would always be at a loss. Entering the market 100-200 billion bucks will trigger a powerful upward momentum, after which the average purchase price of the bank will be close to the maximum market prices and without the possibility of selling such a volume for sale. There would always be losses!! Therefore, the largest banks sell exclusively on the growth of the market and buy on the fall.. If they say otherwise, then they lie. This is a market law for any major player. Selling in a rally, purchases in the event of a collapse.
How to implement it – I think it's clear to everyone and everyone. There must be sufficient external demand in a rally, in case of a collapse, a sufficient flow of sell orders. If for a specific example, то смотрим schedule S&P 500 and market phases.
1. Position accumulation phase. May-August 2010. Usually several months, considering the amount of funds from primary dealers. Usually the period is accompanied by the maximum fear in the market.. Many are waiting for the second wave of the crisis and sell.
2. Primary market growth phase and activating the most discerning and risky funds. September October 2010. Here, from the side of primary dealers, market buoy mechanism. This is when the market buys out and is supported, чтобы не происходило. The task is very simple. I would call it “magnetic pole displacement”. Ie. cause confusion among investors and disrupt chains of cause and effect. In other words, so that the interpretation of the news background goes in only one direction - growth is always, чтобы ни произошло. Bad news - growth, good news - also growth. Important, so that the new ideology, new market normality has developed among bidders at a reflex level. So that everyone has it firmly in their heads, that the market is bullish, he is redeemed, и главное, что рынок растет всегда. Who was at the time, they remember well.
3. Secondary growth phase. Market entry for conservative investors and funds. On the graph S&P is November 2010-February 2011. 4 months. Major purchases in progress. Usually funds operate with some lag. Ask any manager and he will say, that they pack the portfolio in long for the full program, when the trend becomes steadily upward, when the news background is neutral-positive, when all resistances are broken and the market rises. In this phase, primary dealers no longer buy out the market.! Their task is, for the “market buoy” to become a self-sustaining mechanism and function itself on the market crowd. For the market to buy out corrections by itself.
4. Consolidation phase. Usually used for meat, ie. for retail. March 2011-June 2011. Это время, when professionals leave the market. During this phase, primary dealers are required to close all their positions., which were opened at the moment the trend was born. This is the final period and it is here that the final profit is formed.. The market is still strong, but at the expense of, that sales are stretched over time and supported by an influx of bids from speculators and small funds
5. Return phase. July-August chart 2011. This is where all the fun happens.. Usually the market starts to descend at a rapid pace. Primary dealers release market support, which existed before and exacerbate the news background for a more aggressive reset of positions. It is extremely important for them, so that at this moment funds and long-term investors are fully loaded into long. For this, such a protracted and necessary rally was needed.. Maximum loading into long provokes the most powerful reset of positions at the bottom. This is what is required! The very powerful flow of sell orders, which is provoked through massive margin calls, supported by market fear and horror.
And then everything repeats again. I am writing this, simply because, that many have completely forgotten, how markets work. Many threw their positions in panic, randomly shorted at the bottom or did other stupid things. If you follow this concept, то после беспорядочных продаж будет consolidation market. Usually several months, where banks will buy the market on loys, preparing for a new rally, ie. after the rebound, we can test the bottom again. The fact, that now large longs of funds have left the markets and will not return soon. After such a collapse, the market will still be weak for a while, but in the short term they can be caught on a short squeeze.
By the way, for many I can throw an interesting topic. For the sake of interest, then correlate the DOW or SIPI schedule with the news background. It is enough to take the headlines of the largest news agencies from the archive and you will see a suspicious contraption. At the moment of maximum panic, all the shit comes out, literally everything. Sometimes you think, where did they get so much shit?!)) Here is the political crisis in the United States, with debates for half a year, here and the revision of the S rating&P, there is also a debt crisis, another attack on Italy and Spain, plus much more. Here the question will arise, and what is the causal relationship?
Maybe the market is falling just because of bad news?! But, look and understand, what correlation иная и новости лишь поддерживают падение, rather than provoking it and should the market turn around, how all the news shit and fears go away. Here many will exclaim, that the market does everything on expectations and in advance. And miss again! There is simply no time to paint, then everyone who is interested will do it themselves. Ie. I to that, what the market is shaping the news, not news market. There is a price and already news comes out on it, and not vice versa, please do not confuse this!
Friends, this is a huge business, trillion bucks. If with an example about a small district gop. grouping and local precinct everything is simple and clear, then there are more complex methods and much more money. Here, in a day, the US GDP flies through the auction! )) Steeply, Yes?! )) If several officials are put in the drug trade, unbuckling them for pocket money, then in this environment politicians and presidents are put cancer. Politicians are people too, want to eat, drink and rest and they need money too. Не нужно удивляться тому, that Wall St controls the courts, legislative and executive powers, no need to be surprised, that Congress, FED и президент пляшут под дудку банкиров. Не нужно этому удивляться. This is the harsh truth of life. It hurts to understand and admit, but money and power decide a lot in this world. For 100 Bucks are ready to kill at the entrance, and for 1 trillion will make a world war.
Just different rates and different amounts.
Они ни перед чем не остановятся, protecting your power and influence. The one, who issues money - he does not care about laws. He is the only law and he has all the power. This is the world of the monetary system. Harsh, cruel, with its own traditions and rules. Another world. They made a crisis, for their own survival and profit and organize another, if they deem it necessary. So a dangerous audience. The banking system is not a charitable organization, it is a business with an extremely high liquidity turnover with its own laws and regulations, which are far from, what is generally considered in the public.
well, as for the mechanisms of influence on the market, it is technically difficult, but doable. You ask, is it possible for such a large market, how to stop and deploy in the USA accurate to 1 item? Yes, it is possible and it is done something like this.
Before, this was not due to technical reasons. There was no internet commerce, there were no powerful computers and data centers. But now something like this:
Dealers have data centers, staff of mathematicians and programmers. There is not a single economist!)) In short, the task is, to collect a market profile and statistically process it. What is this? Segmented Market Analysis. Who, with what amount and in which direction it costs in real time. Они же Brokers и знают все позиции по рынку.
To know, how many positions are in long, which according to CFTC every Friday it does not mean anything. It's important to know, first, who costs and how much. One thing 10 thousand speculators with one contract (= 10 thousand contracts), which is unpredictable chaos, like a flock of moths, and another thing is a big fart with 10 thousand contracts. In this way, you can estimate the likely market movement after a provoked movement against or by the position of this large fart. Not even for market prediction, а для того, to estimate how much dough you need, to fail or lower the market and how much money is needed, to expand the market. Possessing a card, market profile, knowing the accounts of all customers and their actions, then nafig don't need any inside information, because. this is the grail-insider. Ie. they know exactly at what levels the margin calls will be and from whom exactly and can assess the strength of external influence. In other words, they know for sure whether any large buyer will appear from the outside. All this information makes it easy enough to manipulate the markets.. Маркетмейкеры. Переводится, how to do the market and in fact it is! They hold this market and they make it.
A source:
