Monday, November 5, 2007

I Hate Being a Bear

I was watching my profits gather steam this afternoon as the indexes headed into fresh lows. As you might know, I'm short the indexes, so this was fun to watch. As expected, the indexes paused in areas which have provided support over the past 1.5 months. No big deal. I expected the pause. I considered covering my shorts. Nah, as it looked as if the indexes might close near the LOD, I decided to just let things ride, and hope for a bigger shake out in the morning.

Then, somebody with deep pockets came to the rescue. Was it Bernake? Goldman Sachs? Who knows. Whoever it was loaded up. I want to be on record saying I'm not a conspiracy theorist and I don't really believe that the Plunge Protection Team would come to work on a boring day like today. However, this type of action sure does leave me wondering if Helicopter Ben did not drop some cash on the markets this afternoon, and it definitely makes it hard to be a bear.

Above we have the S&P 500 represented by the SPY. At exactly 3:05, somebody began buying roughly 5.25 million shares, which cost approximately $7.9 billion.

Next we have the Dow, represented by the DIA. Again, right at 3:05, a large buyer steps in and picks up roughly 473K shares, costing them $63.8 million.

Here we have the Nasdaq Composite (QQQQ). At 3:05, a large order begins filling for roughly 3.2 million shares. This cost the buyer about $1.7 billion.

To sum this up, someone or a group of someones stepped up and placed a buy order across the indexes equating to almost $10 billion.



Dogwood said...

Nothing to worry about Woody, that was just me putting the rest of my capital to work, you know how I hate to sit on the sidelines!

newequity said...

Yeah right. I hope Woody stays blogging even if the fly quits this week.

Denarii said...

The bond market took a big hit at the same time so someone was selling boonds bigtime to buy stocks - asset reallocation

Anonymous said...

It's always hard to speculate, It's most likely short covering by the day trading bears. There are tons of traders who will only play the short side intraday(I think). They also may be getting more and more aggressive, and more willing to hold overnight.

I expect a neutral day tomorrow, and a rally on csco earnings on wed, then we see 1490 succeed or fail.

I'd sell your qid before noon tomorrow(if 1490 holds). Then turn that against the financials on the wed rally.

Of course my crystal ball works more like a magic 8 ball.

ducati998 said...


The ETF's [SPY,DIA,QQQQ] are derivative products. They follow their respective indices constituents.

Therefore unless the constituent stocks were being purchased, thus forcing the rise, the ETF's would simply not move [barring a small spread]

If they did, then, an arbitrage opportunity would present itself, that opportunity, in this day and age of program trading would not last long.

Thus we can surmise that the constituent stocks were all purchased [long] in enough volume to generate the price action within the ETF's.

jog on

Woodshedder said...

Denari- good point about the bond selling. I didn't consider that.

Grant- I had considered it might be the constituent stocks, but I didn't have the time to go through the charts to make sure that they all experienced the same move. That makes sense though...

I guess it was just one hell of a buy program.

Danny said...

my blood is curdling since im almost agreeing with grant, but it was obviously a trading program.

Broker A said...

It was Santa Claus.

Andy said...

I didn't see the 3:05 buy in the financials - didn't show up in the SKF