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Earl wrote "One of the more puzzling aspects of the rally from the Oct low
has been the relatively light volume on the futures whether one measures by
contract volume or net tick volume (net intraday up/dn ticks)"
I would have expected the volume in the futures markets to be greatly
reduced. We just had the largest point move in the shortest period of time
during pit-session trading that I have witnessed in 16 years of trading,
INCLUDING the 1987 crash. Remember, this type of move does not happen on
the downside due to 25 point limits. Consider:
1)Last Thurs. 50.00 move in 5 minutes increased the risk of S&P futures
trading dramatically.
2)Floor traders are reducing their own scalping lots
3)Off-floor day-traders are reducing their size as well
4)Many firms are requiring higher than 50% margin for day-trading the
S&P...some have gone to full margin.
5)The battlefield is littered with bodies after the Fed came in with a
cannon that blew up
many of the troops. Many were injured badly. The healing process will take
time.
The Fed reserve in it's own peculiar way has increased the risk in
derivatives rather than decreased the risk. Without liquidity, these
markets will die a slow death. Good or bad????
Tom Stein
comfut@xxxxxxx
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