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The Derivatives Tornado


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#1 wndysrf

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Posted 06 June 2003 - 03:28 PM

I will be honest. I was sucked in by The Matrix. Today looked like the start of a parabolic blowoff to the March 2002 highs. I bought a handful of semi’s on the open. I sold them mid-day and went short. On the swup, I got nervous and bailed. Lost money and commissions.

What a head trip this market is. Record volume spike today. It will be retested, unless we totally collapse and head down with huge 3 billion share days.

I’ve never seen such extreme volatility in the gold, currency, and Treasury markets. How are the Commodity Robots holding out? I am astonished that we haven’t read about any blowups.

……………………..

U.S. consumer credit expands $10.7 billion in April by Rachel Koning

Consumer borrowing increased more than expected in April, rising $10.7 billion or nearly 7.4 percent to $1.76 trillion, the Federal Reserve said Friday. Auto loans were a significant contributor to the overall rise. Economists polled by CBS MarketWatch.com thought credit probably expanded $1.9 billion that month. Revolving credit or credit card borrowing increased 2.3 percent, the smallest rise since a drop in December. Non-revolving credit such as auto and student loans jumped 10.9 percent. March overall consumer credit was revised down slightly to show a $790 million gain that month.

Derivatives volume over $60 trillion in Q1 by Greg Morcroft

The U.S. Office of the Comptroller of the Currency said Friday derivatives held by U. S. commercial banks rose $5.3 trillion in the first quarter, to $61.4 trillion. The agency said earnings attributable to the trading of cash instruments and derivatives rose $1.2 billion in the quarter to $3 billion. For all banks, the fair value of contracts past due 30 days or more totaled $50 million, or 0.008 percent of total credit exposure from derivative contracts. Derivatives charge-offs for the quarter decreased $44 million to $30 million, and represent 0.004 percent of total derivative exposures, "well below the 0.35 percent for C&I loans." While The number of commercial banks holding derivatives increased by 61, to 488, the OCC said, "The top seven commercial banks account for almost 96 percent of the total notional amount of derivatives in the commercial banking system, with more than 99 percent held by the top 25 banks.",

Mark’s Translation:

The Matrix Agents are desperately trying to keep afloat The Paper Pyramid. All traditional sources of credit to feed the Multilevel Marketing Pyramid are becoming exhausted.

Except for one.

The Chief Matrix Agents realize that the only source of new credit remaining is the securitization of margin loans. But first, they have to create a derivatives tornado to jam the equity markets and get a New Bull Market going. Once the New Bull Market is created, then millions of speculators will come in to join the party. Price action in the beginning of the New Bull Market must be spectacular in order to entice the Animal Planet Herd.

The daily futures jamming, Repo Blasting, and concurrent explosion in derivatives volume is no accident. The New Bull Market has been spawned from a volcanic eruption in derivative paper emerging from The Money Center Banks. Al Green’s Reliquifaction Machine has pulled off the impossible. To draw in the retail speculator, encourage him to go on margin, and create another wave of new credit to feed to the Paper Pyramid.

The resulting tidal wave of speculation will unleash a resurgence in Capital Spending. Capital Spending on the fanciest PC’s, trading software, 21” flat panel screens, Aeron chairs, subscriptions to “Get Rich Quick on Futures” newsletters, and all the rest.


............................

Almost a 50 point move to the downside today. The second longest candle of the year.

Congratulations to Merciless and others for grabbing shorts on the open. It took the same guts as those who went long on July 24.
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#2 wndysrf

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Posted 06 June 2003 - 04:04 PM

The leaders of "The New Bull Market"

Wild Reversals and Breakdowns.

Let's see if these hold on Monday.

http://stockcharts.com/candleglance?hov,cf...#124;C|D20
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#3 Stoolander

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Posted 06 June 2003 - 04:07 PM

Me like-ee.

A shooting star to build a future on. :D

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#4 h2orush

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Posted 06 June 2003 - 04:13 PM

Mark,

Sorry you closed your shorts intraday. Curious as to what you saw that made you believe it was a "false" reversal.

Volume was absolutely huge, nearly 3 billion on NASCRACK and painted a shooting star reversal candle for all eyeballs to think about all weekend.

I doubt the bulls will give it up easy. The pullback will be key, as to how much damage is done. But all the indicators are there for a healthy decline, sentiment maxxed, your going long, Myself mentally capitualting this morning in an email to clients/friends.

Fun day....I grabbed NBIX short at 60 and covered at 55.50, a 4 1/2 point intraday move, the biggest scalp I've ever had. Feels good to have a winner after so much pain......

Have a great weekend!!

#5 BeerMarket

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Posted 06 June 2003 - 04:27 PM

IMCLE still heading down ah, now down over $1. Serious bagholding going on there today.

#6 Stoolander

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Posted 06 June 2003 - 04:28 PM

Nice volume on the Nasdaq, looks like a 3.0B share day. At least we know there's more than a few pair of eyes watching.

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#7

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Posted 06 June 2003 - 04:30 PM

Have to laugh as I'm listening to O'Brien. He's just talking in circles trying to explain where the market is going. Whole lot of "confluence" going on according to him. :lol: :lol:

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Posted 06 June 2003 - 04:34 PM

check out tgen. huge upmoves. riverboaters in my office are planning to buy monday, selling their other stuff to buy this one.

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#9 PileDriver

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Posted 06 June 2003 - 04:35 PM

Monday's Open

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Posted 06 June 2003 - 04:36 PM

Today may well be THE top of this rally.

I may well come out with little or no damage in the end.

But what I went through last few days was absolutely unnecessary.

Hope I remember this lesson.

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Posted 06 June 2003 - 04:41 PM

I'm sure I don't need to remind anyone here, but the use of stops in this environment is just as suicidal as not using them. The intraday swings are designed to take out all of the stops in both directions every day - just to keep the blender on puree. And when a stop clearing tornado comes through, the crooks close the position as disadvantageously as possible - frequently 10 cents off the stop price even on a highly liquid stock. They've solved the decimilization issue in their own special way...they're making a fortune at this game.

Plunger

#12 realist

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Posted 06 June 2003 - 04:41 PM

All these gains made since March are still considered "Paper Gains".

They will be locked in sooner than later.

SPX shooting star looks terminal to me. B)

#13 GTNWORSE

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Posted 06 June 2003 - 04:45 PM

Hey Guys,
Did not have the balls to go short via Rydex at 12:29PM. As I have said I've been waitin and waitin for what feels like, smells like, and has all indicators of a top. I know it's not going to be perfect, but this sure looks like it.
Will wait another couple of days to see what the re-test of todays highs looks like, and yes I believe that will come next week.
Be Well

#14 PileDriver

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Posted 06 June 2003 - 04:45 PM

shorted 1/4 SPY at Noon. Stop 2%, then went to lunch and forgot about it.

No emotions, could care less if it works out or not.

Why now vs. wait? Cuz 'ya never know for sure.

Additional 1/4 orders queued at lower "key" confirmation spots as we work lower, yes lower, not higher.

I do not add to losing positions - I must be proven right on previous probe before I add more. :P

I sell going down, not up. Average up, not down. Throw good money after good, not bad. :lol:

"George Costanza" :grin:

#15 wndysrf

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Posted 06 June 2003 - 04:48 PM

Screaming is not over yet. Still plenty of unemployed actresses out there trying to get our attention.

Scottcardiff:

Did you grab this one??

JerryMcGuire:

Congratulations on ASIA.

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