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By aggressively buying the futures, Solomon or other big player, try create
a snowball effect. If they push the future very fast, it create a divergence
with the cash that triggers arbitrages (selling the future/buying the
basket). When the underlying basket start to rise, it might bring some new
buyers to the table and create at least a short term rallye. If Solomon was
long today, it was an expensive exercise.
There is no question that short term, big players have a big impact on the
"noise" of the market, but certainly not on the overall trend.
That is why, it makes a lot of sense to follow trends, and not trying to
outsmart Solomon or Merill, even with sofisticated filters and oscillators.
Sylvain Bergfeld
www.alterama.com
----- Original Message -----
From: "Sylvain Bergfeld" <zfrench@xxxxxxxxxxxxx>
To: "AlternativeAssetManagement" <INFO@xxxxxxxxxxxx>
Sent: Friday, February 15, 2002 12:12 PM
Subject: Fw: The SP this morning
>
> ----- Original Message -----
> From: "Brian" <blink64@xxxxxxxxx>
> To: "List, Omega" <omega-list@xxxxxxxxxx>
> Sent: Friday, February 15, 2002 12:04 PM
> Subject: The SP this morning
>
>
> >
> > I heard from a friend this morning who has an SP squawk, Solomon was in
> the
> > SP futures this morning bidding aggressively 400 lots at a time, which
> most
> > likely explains the divergence between the SP and NAS this morning.
> > Apparently he was primarily responible for the first rally from 1107 to
> > 1112, and the second smaller one, and a couple more times around
1111.00.
> > Maybe he was protecting an option position who knows. Anyway, say that
we
> > did succesfully keep the SP bid long enough to attract buyers. THis
then
> > starts a ripple effect through the markets and individual stocks start
> going
> > up. Is this the way it works? Can one person (group/comapny) have that
> > kind of impact? Seems like there should be buyers for stocks first,
which
> > would move the cash which would then move the futures, at least in most
> > cases. Can 1 group like this keep the SP futures bid long enough to
turn
> > the tide of the entire market without support from many buyers in
> > inidividual stocks?
> >
>
>
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