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#1 wndysrf

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Posted 12 March 2003 - 04:58 PM

Mark’s Market Commentary – March 12, 2003

Its official. The Dow Jones World Stock Index (excluding the U.S.) were right at the October lows, as of yesterday’s close. After Europe’s drop this morning, those lows are likely to be broken. Will the U.S. follow? That depends on the success or failure of The Robots, also known as “Proprietary Trading”.

Anyone remember the Portfolio Insurance Program Robots back in 1987? Before the Internet? Before real time charting? Before millions of eyeballs watching the same data? Before derivatives? Before the Credit Bubble? Before the Global Markets were inevitably linked to the SOX? Before the World Economy was linked to the U.S.? Before there were 6000 mutual funds and HedgeHogs? Before the greatest stock market mania of all time?

Anyone want to speculate Now versus Then?

More risk or less risk?

More interconnectedness or less?

More Program Robotry or less?

Wall Struck firms are doubling down with their Robot Trades. According to today’s WSJ:

“With stocks crumbling last fall, John Mack at CSFB surprised his senior executives with a suggestion for how to deal with difficult markets. ‘Let’s make some bets. Don’t be afraid to take some risks.’ This startled people, because CSFB had been sharply cutting back its exposure to trading risks. But now it’s getting back to trading for profit, boosting its exposure.”

“Almost every major firm has begun making bigger bets with its own money. Managers have to do whatever it takes to generate revenue, using proprietary trading. Morgan Stanley launched a proprietary trading group where seven traders can invest several hundred million dollars of the firm’s money. The proprietary trading boom has come from the huge gains achieved by Goldman’s London office, led by star trader Christian Siva-Jothy. Wall Street firms are now trying to figure out ways to emulate Goldman’s approach.”

“Citigroup is taking more risk in distressed-debt, currency and stock trading. CSFB has added some traders and is raising its exposure to interest rates, convertible bonds, credit-default swaps, and emerging markets. Deutsche Bank has set up a separate trading group in New York moving in and out of different markets – stocks, bonds, convertible securities, and derivatives. Merrill has hired a former JP Morgan trader to run a new mortgage-arbitrage trading group.”

“The shift now to proprietary trading recalls the mid-1990’s when many firms encouraged their traders to embrace risks to generate extra income. anal cysts say that while proprietary trading may be working for now, they question how long the gains can continue.”

“A lot of the trading models look invincible for a period of time, but it doesn’t always last.”

Can the Central Banks intervene here for a stick save?

Panic is unfolding in Japan. From today’s WSJ:

Japan to unveil market stabilization plan: Nikkei by Tomi Kilgore

“The Japanese government is expected to announce a number of measures aimed at stabilizing its financial markets, including the expansion of stock purchases by the central bank and joint interventions in the currency market, according to a report in the Nikkei Shimbun's Thursday edition. The financial daily said Japan's Financial Services Agency (FSA) will unveil a six-point plan to support stock prices and will ask the Bank of Japan to raise the ceiling on the amount it can spend to buy shares from commercial banks from the current 2 trillion yen ($17 billion). In addition, FSA will announce intentions to call on monetary authorities in the U.S. and Europe to intervene if the dollar drops sharply following the outset of war with Iraq, the report said.”

“The sharp fall sparked an emergency injection of funds into the markets by the central bank. Key members of Japan’s ruling coalition said it would continue to discuss stock-boosting measures during the next few weeks. But foreign investors say they have become increasingly skeptical of efforts by Tokyo to boost the market in March, only to see prices drift or fall back afterward. anal cysts are doubtful whether any of the suggested measures will prop up Japanese stocks. Some investors who had kept from selling until after the Bank of Japan appointment are now throwing in the towel.”

As we have reported here, there has been no real selling out of the stock market in 2002. Losing stocks were sold, but proceeds were reinvested back into the winners, thus explaining the unbreakable strength in the mania stocks. Too early to determine results so far in 2003. Hans Hans Hans Hans Brinker listeners will be piling in the rest of this week. Foreigners have slowed down their buying, but have yet to become net sellers. After the collapse in Europe this week, that could change. But the real bubble is clearly in the bond market:

Foreign buyers bought bonds, lots of bonds-SIA by Greg Morcroft

“Despite a continued bear market, foreign investors acquired nearly $507 billion in U.S. stocks and bonds in 2002, according to the latest data from the Securities Industry Association. The group said the results were second only to 2001's record $521 billion, according to the SIA's "Foreign Activity Report." Asia, particularly Japan and China, led the way in U.S. acquisitions, reaching $200.4 billion. More than 90 percent of foreign investors' U.S. acquisitions were in fixed-income products, with a new record set in net purchases of agency securities at $191.6 billion. Foreign investors' purchases of U.S. stocks however, dropped in 2002 to $49.5 billion, the lowest level since 1996's $12.5 billion. "With conflict in Iraq looming, foreign investment (predominantly by private investors) flocked to the relative safety of U.S. Treasuries, acquiring $83.2 billion in 2002," the report concluded.”

Of course, Buddha has been watching the Options Expiration Firing Squad emerge every month, right on schedule. It has never failed:

Morning Post:

“Closing out all short positions after open tommorrow. Expecting OE ramp at any time regardless of TA, etc. sorry. I have been made spineless and a running dog stooge for the Capone racketeering element. Better to live with decent change in pocket than to die, machine gunned up against a back wall out behind the Tribune building and then rolled into the great, green slime of the Chicago river. Expecting hyped noise on bullhorns at any time. Sorry for emotional nature of post. I have thrown my lot in with the 5 families and have sworn fealty to Lansky, Nitty and Al Green for the short term. Please forgive my disloyalty to board, Doc and other revolutionary fighters for the cause of truth, justice and the healthy stool. Also disregard my actions as they are merely forensic in nature and have little to do with anything more than fear and loathing and my monthly need for income to support a burgeoning romance with an insatiable Swedish divorcee. Will fill in details later unless my precious bodily fluids suffer from severe depletion.”

Afternoon post:

"Right on schedule and almost boring. Classic OE spiking on Wed-Thurs. before OE Racketeering Week. Single best no-look play in the monthly book. 150 points of pure Caponeish Price Muscling in a scant 2 hours. Plenty of running room North remains. Never underestimate the ability of the 5 families to manipulate short term trends in the scam market. Expect to see spate of news drivel over coming days to fan the criminal fire. Attempting to short spikes during OE is not advised unless one's lineage traces back to Doc Holliday and his trades are bookended by whiskey sours."

The positive effect of the frequent jamming is that shorts are consistently blown out every 3 days. In fact on most days, there is always some type of spike that constantly sweeps the weak hands. What is interesting is that the jamming doesn’t seem quite as intense as last spring and summer, where back to back 65 point days on the Nasdaq and frequent gaps up were commonplace. That kind of action kept the shorts from piling on.

Big volume acceleration today. Lower lows on higher volume.

Special Announcement:

I will be leaving for Hawaii tomorrow for a vacation away from the Program Robots. I will be away for two weeks. Will be sampling some Polynesian Crushed Velvet Interior. I will try to post when I can, but keep in mind that due to the weird time zone, posts will be erratic and irregular. Doc will be keeping the forum going by opening up a new thread after the close every day.

Good luck to all Riverboaters attempting to navigate the Quadruple Witching Madness next week. Just in time for the Bradley turn, just in time for a war announcement, just in time for Dover Sole readings and all the rest. Still waiting for massive Program Robot Malfunction when the “easy” and “predictable” plays like OE or TOM “accidently” reverse. Then its tail testing time on the Programs. Ten Sigma, anyone??

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#2 Bird D Durr

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Posted 12 March 2003 - 05:12 PM

Loved the Piece.....................

Have a migraine............................

Barcardi & Vicodin................................Really work for these kinda of days............

#3 machinehead

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Posted 12 March 2003 - 05:28 PM

MSFT, INTC and AMAT had outside reversals to the upside today.

Unlike the DJIA and SPX, the NDX (Nasdaq 100) has held above its Feb. 13th lows. It is showing relative strength versus the broader averages.

(I apologize in advance for the bullish propaganda, but the linked article explains how NDX strength is being engineered using CANSLIM principles:)

Buy dat mo
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#4 soup

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Posted 12 March 2003 - 05:30 PM

perhaps I will be waiting for a while, but I am still waiting for the day when money actually leaves the market. Incredible, that given all the destruction, all the blow up of cult stocks, the morons still pile into the same 3 or 4 stocks. Only fear is fear of being out of the mkt, or I guess no one will ever get fired for owning amgn?
""Pretty bubbleheads preen daily on our financial networks, playing the shill to Wall Street and Washington in order to lure unsuspecting Americans into buying insanely overvalued stocks. The great market exchanges, once prudent arenas of investment where the engine of capitalism traded value for value, have become sham casinos staggering under decades of massive Fed created debt and lurching into oblivion on the greater fool theory. Yet our high level bureaucrats, led by Alan Greenspan, exhort all Americans to consume still more of their seed corn and seek still more fools." N. Hultberg

#5 soup

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Posted 12 March 2003 - 05:31 PM

machine: I understand that the billy oneal momentum chasing and not thinking rules the day; but that just tells me the ndx has to break down before we can rally.
""Pretty bubbleheads preen daily on our financial networks, playing the shill to Wall Street and Washington in order to lure unsuspecting Americans into buying insanely overvalued stocks. The great market exchanges, once prudent arenas of investment where the engine of capitalism traded value for value, have become sham casinos staggering under decades of massive Fed created debt and lurching into oblivion on the greater fool theory. Yet our high level bureaucrats, led by Alan Greenspan, exhort all Americans to consume still more of their seed corn and seek still more fools." N. Hultberg

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Posted 12 March 2003 - 05:32 PM

:) Made my first gold stock purchase today, small position on GLG @ 9. Any thoughts on this one? Thanks!!!

#7 soup

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Posted 12 March 2003 - 05:33 PM

in a bear mkt no stock is a safe haven. Even when they look like they are impregnable, just look at the long list of darlings that have blown up, intc,crisco,arba,nvda,sebl, all the sure things, the safe bets, that are but mere shadows of their former selfs.
""Pretty bubbleheads preen daily on our financial networks, playing the shill to Wall Street and Washington in order to lure unsuspecting Americans into buying insanely overvalued stocks. The great market exchanges, once prudent arenas of investment where the engine of capitalism traded value for value, have become sham casinos staggering under decades of massive Fed created debt and lurching into oblivion on the greater fool theory. Yet our high level bureaucrats, led by Alan Greenspan, exhort all Americans to consume still more of their seed corn and seek still more fools." N. Hultberg

#8 wndysrf

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Posted 12 March 2003 - 05:38 PM

The most reliable trading strategy: OE Racketeering Play.

Count 7 trading days from the beginning of the month.

The last six months, every time, we had a reversal on the 7th day for 3 - 5 trading days.

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#9 phatbubble

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Posted 12 March 2003 - 05:46 PM

have a good 2 weeks, mark. which island?
Quod Severis Metes

Your life is the sum of a remainder of an unbalanced equation inherent to the programming of the Matrix. You are the eventuality of an internal anomaly, which despite my sincerest efforts, I have been unable to eliminate from what is otherwise a harmony of mathematical precision. While it remains a burden assiduously avoided, it is not unexpected, and thus not beyond a measure of control. Which has led you, inexorably, here.
You haven't answered my question.
Quite right. Interesting. That was quicker than the others.

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Posted 12 March 2003 - 05:55 PM

:) Made my first gold stock purchase today, small position on GLG @ 9. Any thoughts on this one? Thanks!!!

I bought into gold stocks back in january only to see them all fall. new strategy is to sell when the shares have recovered and go back to cash.

Also considered the central fund from canada. They hold physical gold and silver and sell shares. Might be safer than holding miners subject to hack jobs from Barrons and everybody else.

I am starting to believe that in a big crash the miners just won't be immune from getting their share prices wiped out. They might make a good purchase post crash.

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Posted 12 March 2003 - 05:58 PM

Mark,

Have a great vacation! Tanks for all your hard work here. Please bring back pictures of Island Exotica. :)

#12 ThorAss

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Posted 12 March 2003 - 06:00 PM

Some sense of self-preservation, which has failed me udderly in the PMS recently, had me bail out of all my Broad Shorts at about 11:30 today on the way down. If we can somehow stage a PMS rally in concert with a broad market rally I might be able to strap on shorts again. Otherwise I'll be sitting out the next few dances.
I have many opinions; but I strive not to act on them.

#13 soup

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Posted 12 March 2003 - 06:02 PM

Imagine that? "4:44PM Intel CEO says against expensing options -- Dow Jones (INTC) 16.20 +0.35: Separately says co's flash prices to remain the same. " What crap, nothing has changed. Not expensing options is downright fraud. I repeat, after three years Nothing has changed. We still do not have an sec and corp mgmt are still shills.
""Pretty bubbleheads preen daily on our financial networks, playing the shill to Wall Street and Washington in order to lure unsuspecting Americans into buying insanely overvalued stocks. The great market exchanges, once prudent arenas of investment where the engine of capitalism traded value for value, have become sham casinos staggering under decades of massive Fed created debt and lurching into oblivion on the greater fool theory. Yet our high level bureaucrats, led by Alan Greenspan, exhort all Americans to consume still more of their seed corn and seek still more fools." N. Hultberg

#14 coboy

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Posted 12 March 2003 - 06:03 PM

Incredible,

All bad news are company specific, all good news are applied to all stocks..

CYMI is down ah, all other semis are up..

Last year I remember only one time that OE ramp didn't work and I was completely surprised.. Amazingly it still works, efficient market my azz.. Problem with robots reversing is now there are curbs :huh:

Have a nice vacation Mark...

#15 wndysrf

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Posted 12 March 2003 - 06:13 PM

Phat:

I will be in Maui.

I will have my digital camera, so I expect to post some photos of some Island Exotica, Spring Break tourist girls, and all the rest for your entertainment...

Anybody see the charts of the DAX, FTSE, and CAC?

They went vertical today. Waterfall pattern means imminent reversal in the global markets is very likely.

I would be looking to go long the DAX and FTSE. They have been absolutely crushed.
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