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Intel55@xxxxxxx wrote:
...
> 500 handles + in the blink of an eye. A few weeks ago I saw it offered down 3
> handles with no bids in site....if you were long you were losing and no way
> to get out. I always love hearing :" 800 even offer (ex 92800) " then "600
> even offer on a hundred" " 400 even offer" "LIMIT OFFER"!!!!!!!"
I invite comment on the following...
I've heard it said that the reason behind these kinds of moves and market
conditions is the use of sell programs on the part of funds that want to
exit long positions in the underlying issues of the S&P stocks.
The procedure goest something like this:
1. Short the spooz.
2. Sell your stock, causing the cash index to drop, pulling down the spooz.
(PREM opens up, sucking in other sell programs at times.)
3. Before you're done selling, cover your spooz short.
4. The profit on the spooz short mitigates or even outweighs your slippage
on the equity exit.
Because you're the fund selling the stocks in the index, you know when to
cover the spooz with exact timing.
The fellows in the pit are wise to this and know when these programs
are coming in so they're careful to stand back.
Lately we've been seeing a lot of these "afternoon selloffs" that seem to hit
just after lunch. The equities go up in the morning, hang around for a
while during lunch, and then you might get a few minutes of warning as
the slide starts to hit before it turns into a full on rout. Then as
suddenly as it came on, it goes away. For an example look at the spooz
today from 1350 to 1530 to the close. (Who picked those numbers anyway?)
True or False? Comments RT?
Phil
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