Bill Cara’s Blog for Jun 8, 2012

CTA Trading Desk Morning Report

[7:00am ET] Good morning, Geoff here.

This weekend, EU officials will be discussing Spain’s request for a bank bailout. With unemployment high, what policy actions will be taken in order to help the overall situation?

Yesterday, Fitch warned that it would cut the AAA rating of the United States if there is no credible fiscal plan put in place.

They are in quite a bind, are they not?

With pressures mounting both for and against more liquidity programs, it seems clear to me that they have no choice – Bernanke did not help my case yesterday, but eventually the printing presses will be running at full tilt. With all the liquidity already thrown at the problem without a permanent solution, how much effect new reflation efforts will have on the main problem is questionable. What is probable is that the price of gold and other commodities will be much higher down the road.

Gold rallied up to the 38% retracement, was overbought and got taken to the woodshed on Bernanke’s speech. What else is new? However, my studies show that the recent lows should hold barring a major “risk off”, throw that baby out with the bathwater event – and if that occurs, gold will be on sale.

[inline:ggimage01_060812.png]

There is a lot of talk about “risk off” on the television, but as long as $SPX holds above the Fibonacci support, the downtrend line and the 1300 level, the market is pricing in the liquidity pump. If those levels fail, then caution is warranted.

[inline:ggimage02_060812.png]

The dollar is holding support, but if that support fails the markets should rally.

[inline:ggimage03_060812.png]

Have a great trading day!


Here are the 7:00am ET snapshots of the latest equity market trading results for Europe, and futures prices plus 5-minute charts of the futures for S&P 500, 30-year US Treasury Bond, US Dollar index, Gold and Crude Oil.

Symbol Name Last Trade Change Related Info
^ATX ATX 1,893.06 6:44AM EDT Down 17.94 (0.94%) Components, Chart, More
^BFX BEL-20 2,091.80 6:26AM EDT Down 8.20 (0.39%) Components, Chart, More
^FCHI CAC 40 3,040.74 6:59AM EDT Down 30.42 (0.99%) Components, Chart, More
^GDAXI DAX 6,085.16 6:44AM EDT Down 59.06 (0.96%) Components, Chart, More
^AEX AEX General Chart, More
^OSEAX OSE All Share 437.06 6:44AM EDT Down 4.23 (0.96%) Components, Chart, More
^OMXSPI Stockholm General 303.09 6:42AM EDT Down 5.20 (1.69%) Components, Chart, More
^SSMI Swiss Market 5,836.46 6:44AM EDT Down 32.75 (0.56%) Components, Chart, More
^FTSE FTSE 100 5,391.73 6:44AM EDT Down 56.06 (1.03%) Components, Chart, More
FPXAA.PR PX Index 885.00 6:58AM EDT Down 7.90 (0.88%) Chart, More
MICEXINDEXCF.ME MICEX Index 1,327.99 6:59AM EDT Down 5.09 (0.38%) Chart, More
GD.AT Athex Composite Share Price Index 492.94 6:43AM EDT Up 0.75 (0.15%) Chart, More

http://finviz.com/futures.ashx

http://finviz.com/fut_chart.ashx?p=m5&t=ES

http://finviz.com/fut_chart.ashx?p=m5&t=ZB

http://finviz.com/fut_chart.ashx?p=m5&t=DX

http://finviz.com/fut_chart.ashx?p=m5&t=GC

http://finviz.com/fut_chart.ashx?p=m5&t=SI

http://finviz.com/fut_chart.ashx?p=m5&t=CL

The team will check in during the day, reporting in the Discourse when there is a new entry.

Enjoy your day.


Vad’s Catch of the Day


Kaimu’s Sound Money


Deron’s Daily ETF Analysis

Over the past four days, we have been tracking the ProShares UltraShort Oil and Gas ETF ($DUG) for a possible long entry on pullback into the 20-day and 200-day moving averages (see our June 7 ETF commentary). Yesterday, DUG formed the reversal candle we were looking for, as a possible pivot for a buy entry. As a result, we have now placed DUG on our watchlist for potential swing trade entry. Specific entry and exit price details are available to subscribers of The Wagner Daily in the watchlist segment of the newsletter. The daily chart below illustrates the “undercut” with reversal bar we were anticipating:

DUG

Yesterday, on a spike in volume, the Direxion Financial Bear 3x ETF ($FAZ) formed a bullish reversal candle. After undercutting support of its 20-day EMA, FAZ rallied sharply and closed at session highs. FAZ now offers a potential long entry just above yesterday’s high of $26.99. We are also placing this inversely correlated “short ETF” on today’s watchlist:

FAZ

Several days ago, we exited and took profits on our remaining short positions because the broad-based ETFs had finally undercut their 200-day moving averages and formed reversal candles. With the undercut and a reversal candles in place, the odds favored that we would see a bounce in the broad market. Consequently, we suggested patience by sitting in a cash position as stocks bounced and to wait for proper ETF trade setups to develop. Yesterday, all of the major indices put in reversal candles and there are now a plethora of potential short entry setups in the market. As we’ve often discussed, it’s important to wait for ideal setups to develop; otherwise there is a high likelihood of overtrading and churning one’s trading account.

The commentary above is an excerpt from The Wagner Daily newsletter, which we have been publishing since 2002. Subscribers to the full version receive our exact entry and exit prices for swing trades of the top ETF and stock picks, access to our market timing model, and more. To get started today, sign up for your 30-day risk-free trial to our Wagner Daily trading newsletter or visit our swing trading blog to learn more about our proven technical trading strategy.


OptionOracle


Jake’s Take


Harp’s Roadmap


Cara on the Metalminers


Cara on the International Markets


CTA Trading Desk Mid-Day Report


CTA Trading Desk Post-Close Report


  1. 8:30 AM ET International Trade 10:00 AM ET Wholesale... [#109956]
    By: davefairtex (5215 comments) Go to top ↑
    • 8:30 AM ET International Trade
    • 10:00 AM ET Wholesale Trade
  2. 14 in Buy alert 1 in Distribution Zone 1 in Sell... [#109957]
    By: davefairtex (5215 comments) Go to top ↑
    • 14 in Buy alert
    • 1 in Distribution Zone
    • 1 in Sell alert

    Accumulation Zone (10%): Monthly 10, Weekly 20, Daily 2
    Distribution Zone (5%): Monthly 8, Weekly 2, Daily 5

  3. Welcome aboard Deron, truly enjoying your contribution to... [#109960]
    By: tgifbipo (190 comments) Go to top ↑

    Welcome aboard Deron, truly enjoying your contribution to this blog, Bill is making this blog my first read of the day with promises to make it even better. My 12 hour shift pattern allows me so much time to dedicate to my continuing education of the markets and with only a couple or three years left to work i can them put my full efforts to what has become a joy and passion. Unfortunately as of late part of my learning curve has seen so much outright fraud and crime in the market place that i hope i can let go of these experiences when the markets actually are free and clear of such things.

    Ivo

    • Hi Ivo, Thanks for the warm welcome. I'm glad you are... [#109961]
      By: Deron Wagner (77 comments) Go to top ↑

      Hi Ivo,

      Thanks for the warm welcome. I’m glad you are enjoying my daily ETF commentary. In addition to discussing potential ETF swing trade ideas every day, one of the main focuses is to teach the disciplined, rule-based trading strategy I have been employing for the past 10 years. In other words, I believe in teaching traders how to fish, rather than just giving them the fish.

      If you want a good overview of my swing trading strategy, you may wish to check out the following 7-minute video on our blog:

      http://www.morpheustrading.com/blog/best-trading-s

      Wishing you success in your stock market education. Please let me know if you ever have any questions about anything I discuss.

      Cheers,

      Deron

      • Hi Deron, My swing trades have been tough! I follow a... [#109968]
        By: ea32da32 (2362 comments) Go to top ↑

        Hi Deron,
        My swing trades have been tough! I follow a similar concept to yours but the way this market is moving around I’ve been swing trading in a tight time frame – 2, 3 days max basic plan. I don’t like daytrading but will if the opportunity is there (I’m at the computer)…

        I put in a buy order for DUG premarket yesterday morning and it just so happened to hit the mark – was not planning on it at all so I’m in this one with a couple hundred shares and working out well. Everyone here has so many good ideas but I can’t possibly follow them all. I immediately caught the LOW chart, nice and bought some 30 puts this morning first thing – headed the right way. The general market trend is down so I’m shorting any rally’s in MA one I’ve been following for a while – that Feb 1 $360 gap is calling it’s name so long as this market remains in a down trend.

        Thanks for joining everyone here and for sharing your thoughts.
        Earl

        • Hi Earl, Nice to "meet" a fellow swing trader. Our holding... [#109985]
          By: Deron Wagner (77 comments) Go to top ↑

          Hi Earl,

          Nice to “meet” a fellow swing trader. Our holding time frame is longer, about 1 to 3 weeks on average. You’re right that choppy markets are more ideal for shorter hold times. However, we have been navigating pretty well by simply using mechanical stops that are predetermined at time of entry, and then not being swayed by emotions caused by day to day market gyrations. Put another way, we utilize a “set it and forget it” approach with regard to stops, which I have found is a great way to be disciplined.

          Looking forward to getting to know other members of the community out there too.

          Have a great weekend everyone.

          Deron

  4. Hearing of Spain hitting the rocks, but not asking for more... [#109962]
    By: Les (7233 comments) Go to top ↑

    Hearing of Spain hitting the rocks, but not asking for more money to help out its banks. This is because:

    Spain would have to step out of the EFSF as a creditor the moment it asks for funds. This has instant effects on the residual core. Italy’s share rises from 19pc to 22pc, and Italy is in no shape to face extra burdens. France’s share rises from 22pc to 25pc, and Germany’s from 29pc to 33pc.

    How do they raise the money?

    “Our clients won’t touch the EFSF because nobody knows what it really is. They have cut it out of their benchmarks altogether,” said one bond trader.

    The Chinese issued their own verdict on Thursday. The country’s sovereign wealth fund said it will not buy any more debt in Europe until the region takes radical steps to restore credibility. “The risk is too big, and the return too low,” said Lou Jiwei, the chairman of the China Investment Corporation.

    http://www.telegraph.co.uk/finance/comment/ambrose

    Options other than printing are rapidly dwindling. It would appear Europe really wants to melt global markets down and see a bank run ensue on the periphery before it… might… respond. If I recall correctly the ECB cannot even offer the sort of FDIC protection made available to holders of US bank accounts. That would be a start.

    Any rescue must be a loan to the Spanish state, even if the money goes to the bank restructuring fund (FROB). The cost will push Spain’s sovereign debt even higher.

    They really wanna blow this bubble. It will make Draghi’s options even less palatable in future.

  5. ... [#109963]
    By: Les (7233 comments) Go to top ↑
  6. http://thetrustadvisor.com/news/2012 SEI, which is a... [#109964]
    By: Bill Cara (4105 comments) Go to top ↑

    http://thetrustadvisor.com/news/2012

    SEI, which is a wealth manager services provider, polled investment advisors as to their feelings about the presidential election:

    When SEI polled the advisors who attended its national conference a few weeks ago about the upcoming election season, the results indicated that most of the people in the industry are braced for disappointment… Turns out that 74% of the advisors at the conference would be happier if Mitt Romney wins the presidency in November, but 63% expect Barack Obama to be reelected instead.

    • The race is tightening. If there is no national crisis like... [#109967]
      By: bsi87 (1171 comments) Go to top ↑

      The race is tightening. If there is no national crisis like 9/11, people will vote their pocketbook. If jobs numbers don’t improve and the unemployment rate stays up, the outcome will be a real squeaker.

      One of the commentators on Washington Week said voters make up their mind in late summer.

      JMHO, we’ll see.

      • Hi bsi87; "One of the commentators on Washington Week said... [#109969]
        By: ea32da32 (2362 comments) Go to top ↑

        Hi bsi87;

        “One of the commentators on Washington Week said voters make up their mind in late summer”

        He must have been talking about those autistic voters LOL

        Earl

    • my gut tells me O'blama... [#109973]
      By: dberryclan (687 comments) Go to top ↑

      my gut tells me O’blama wins…

  7. Good morning. 08:30 Trade Balance (-$50.1B) 10:00... [#109965]
    By: Bull Hunter (3552 comments) Go to top ↑

    Good morning.

    08:30 Trade Balance (-$50.1B)
    10:00 Wholesale Inventories

    ——

    CSCO – Cisco initiated with a Buy at Citigroup. Target $19

    JNPR – Juniper initiated with a Buy at Citigroup. Target $22

    MA – estimates, target cut at Guggenheim. Shares of MA now seen reaching $510. Estimates also reduced, given the stronger dollar. Buy rating.

    ——

    “An election is coming. Universal peace is declared, and the foxes have a sincere interest in prolonging the lives of the poultry.” ~ George Eliot

  8. ... [#109966]
    By: Seamus (476 comments) Go to top ↑
  9. ... [#109970]
    By: Bull Hunter (3552 comments) Go to top ↑
  10. starting momentarily.... now 15 minutes... [#109971]
    By: Bull Hunter (3552 comments) Go to top ↑

    starting momentarily….

    now 15 minutes late…..

  11. shoulda woulda coulda sold my silver position when I was up... [#109974]
    By: bsi87 (1171 comments) Go to top ↑

    shoulda woulda coulda sold my silver position when I was up 20%. Oh well.

    Putting a buy stop above yesterday’s 3 PM close.

    Do your own homework.

  12. Although it hasn't been blown to smithereens like the other... [#109975]
    By: BillySundance (1355 comments) Go to top ↑

    Although it hasn’t been blown to smithereens like the other big coal names, I think it is worth keeping an eye on Cloud Peak (CLD). This company was spun out of Rio Tinto a couple years back. Balance sheet is solid as they are well hedged for 2012 and 2013. They didn’t make any ill-fated acquisitions in the last couple years like ACI,BTU,ANR. Now that ACI has acquired IOC, CLD is left as the only pure play powder river basin coal producer, which is the cleaner, low-sulfur compared to the dirtier eastern-US coals. CLD also exports about 10% of its production to Asia, for which there is room for additional growth. When the dust finally settles in the coal space, I think CLD may be in a good position to pick up assets on the cheap as their main competitors are still digesting major acquisitions (ACI->IOC, BTU->MacArthur, ANR->Massey). Most importantly, CLD has a manageable debt load of appx $886 and cash of $586, they have strong operating cash flow and their cash pile is rising each quarter.

    Not saying now is the time to buy, but if you are looking for a strong player in the space that might be thrown out with the bath water (esp in the event of a bankruptcy of one of the larger names), I think CLD may be it

    • Hi, Billy... been out of town most of the day.. CLD... [#109999]
      By: baz22 (2875 comments) Go to top ↑

      Hi, Billy… been out of town most of the day.. CLD… absolutely… was ( trading ) in many, many months ago at the $ 16′s… I will have to see nat. gas cross $ 3 and stay above that to do anything more than a trade. Thanks, and have a good weekend.

    • Nice catch, Billy; Cloud Energy is in my list of coals... [#110001]
      By: goldbug58 (370 comments) Go to top ↑

      Nice catch, Billy;

      Cloud Energy is in my list of coals, but one I didn’t pay enough attention to.

      Still researching these at the moment; there is a lot to consider, i.e. thermal vs. metallurgical; state of the export markets; I focus more on China as an export market, but as Mr. Cara said India is reliant on coal to a similar extent; available infrastructure in the U.S. to support exports to Asia; political resistance to coal; as Baz suggests, the impact of natural gas prices on coal; “short” pressure on the stocks.

      Over the haul to 2015-2020, none of this may matter, if global economic conditions slowly improve; so it would seem that the choice of the correct “coal” as an investment for a long-term hold, perhaps, is the important question. CLD seems a very good candidate.

      Thanks for posting the additional data about it.

  13. ... [#109978]
    By: Seamus (476 comments) Go to top ↑
    • Wait... wasn't HFT designated by its detractors as a cause... [#109979]
      By: Vadym Graifer (4341 comments) Go to top ↑

      Wait… wasn’t HFT designated by its detractors as a cause of volume and volatility? I distinctly remember numerous accusations of HFT causing spikes in either direction (and me wasting hours trying to explain why HFT cannot be a reason for those) and replacing “real” trading volume, whatever that is. Now it turns out that HFT merely exploits volume and volatility – position that I always maintained?

      It amazes me how folks don’t see that the whole anti-HFT crusade is nothing more than smoke and mirrors. Sure enough, “new trading restrictions” will be implemented, just like 25K rule after tech boom/bust, to restrict those pesky day traders that caused whole thing, you know… Helped much? Harmed anyone but a small time retail trader?

      Want to know how this crusade will hurt you? Look no further than latest suggestions of those who lead the charge. They offer to increase the spreads. How do you think this will influence your trading costs? All the while you are being assured – and to my amazement believe it – that it’s HFT that increases your costs (which I never saw explained) and its liquidation will work to your advantage. Heck, they even managed to convince many retail traders that financial transaction tax would be to their advantage – what a crafty propaganda!

      Having seen the same scenario unfolding time and again, I have very little doubt about how this fight will end, and who will benefit. I guess I am done tilting at this windmill. When HFT is no more yet market deterioration as a price discovery mechanism continues, it will be merely a time to designate the next scapegoat.

      • If HFT is just another name for "electronic market makers"... [#109996]
        By: davefairtex (5215 comments) Go to top ↑

        If HFT is just another name for “electronic market makers”, my guess is that eventually the code that backs it will become boring, production code at a small number of companies who will have to be content with some fairly thin margins since everyone’s code will basically have the same features and the same latency.

        Honestly I can’t see how having electronic market makers is a bad idea, especially if it results in narrowed spreads for everyone. Market makers have been in place for all of remembered time, and now when we replace them with computers, somehow this is seen as a bad thing?

        Software goes through this cycle in many industries. At first, its the Wild West, with everyone trying to figure out what the right set of features are. Lots of small companies start up, try their hand at serving the market, and most fail, eventually leaving one or two big players who have developed (seemingly by accident) the right set of features that end up making money.

        Perhaps we’re seeing the market just getting more mature now?

        • "If HFT is just another name for "electronic market... [#109997]
          By: Vadym Graifer (4341 comments) Go to top ↑

          “If HFT is just another name for “electronic market makers…”

          Almost. Very similar mechanics and money-making (or losing) logistics. The only material difference is, DMM (Designated Market Maker) is obliged to maintain orderly market by continuously providing two-sided quotes. Private trading company has no such obligation – it maintains two-sided market within the spread simply because this is how it makes money. Of course such obligation doesn’t matter much during real market turmoil when DMMs withdraw their orders – just like HFT does. No one however blames DMMs much for that, it’a kind of a given that they have to protect themselves from heavy losses during turbulent market, while HFT is considered a bad guy for this same behavior. Go figure.

          Aside of this difference (which honestly is not much of a difference in practice), you nailed it.

    • Seamus, The HFT subject interests me immensely. I want... [#109990]
      By: Bill Cara (4105 comments) Go to top ↑

      Seamus,

      The HFT subject interests me immensely. I want this community to discuss what they know about HFT so that I might prepare a white paper. Doing is learning.

      • Bill, I've written probably a dozen of annoyingly long... [#109993]
        By: Vadym Graifer (4341 comments) Go to top ↑

        Bill,

        I’ve written probably a dozen of annoyingly long posts on the mechanics of HFT over last couple years… They may not be structured well since they were addressing certain questions or arguing points, but together they should describe the picture. Thankfully, one of blog participants went into troubles to bookmark them and send some of them to me.

        http://caracommunity.com/content/caras-commentary-

        http://caracommunity.com/content/caras-commentary-

        http://caracommunity.com/content/caras-commentary-

        http://caracommunity.com/content/bill-caras-blog-a

        http://caracommunity.com/content/bill-caras-blog-a

        http://blog.realitytrader.com/2010/07/culprits-and

        Edit: here is the quote from the e-mail with those links sent to me:

        “Vad,

        I happened to save a few of those posts to which you referred today, on HFT and liquidity providers. Not all of them, you spoke about this on a few more ocassions, but those I don’t have. Seeing how much time you put into ths, I can understand your desire to put a stop to this exchange. Thought you might want to have those links at your possession, seems this topic for (some) reason causes quite an emotional stirr. Some of them are from 2009, so no wonder you’d have a hard time finding them! I also wanted to second Billysundance in thanking you for being thorough and not joining mass hysteria about overhyped issues. This is what makes this blog so valuable – Bill, you, kaimu and others who don’t conform to mass opinion.

        Anyway, here they are. Hope blog readers will find them educational.

        Anon”

      • I'd like to hear more of the days before HFT, which would... [#110002]
        By: Les (7233 comments) Go to top ↑

        I’d like to hear more of the days before HFT, which would coincide with electronic trading, would it not? I recall decimalization closed spreads, as remarked in Vad’s book. Were the spreads less reasonable before electronic trading began? As far as I can read from Livermore, the game has always been the same. Not sure how a computer became a disruptive technology, except in the sense it gave a little guy like me the opportunity to study and trade the markets.

        The major disruptions I can think of that negatively affects me is the 25k rule and the shenanigans played in futures markets overnight. The latter is facilitated in this computer age, by humans pushing and pulling what I understand to be relatively thin after-hours markets. Perhaps that was a result of the leveling of the playing field that the introduction of computerised trading brought.

        All I see is a wheel turning, with human emotions remaining the axle on which the technology rotates upon.

  14. Was watching for the break out got it! TNA blasted up thru... [#109980]
    By: Bear E (287 comments) Go to top ↑

    Was watching for the break out got it!
    TNA blasted up thru top bollinger bands along with the ES and SPX.
    I pulled the trigger to exit.
    Thank you Vad!
    Bear E

  15. Doesn't matter to me whom a person wants in office, the... [#109982]
    By: Ron Sen (975 comments) Go to top ↑

    Doesn’t matter to me whom a person wants in office, the issue is what policies do you want implemented.

    You want ‘less regulation’. Does that mean you don’t have a concern about EPA standards, clean air, clean water? Do you want the minimum wage repealed?

    From a fiscal policy standpoint, does your desire increase the C + I + G + net exports equation…or do you want the G reeled in so much that the G falls so much that you get a recession and worse unemployment?

    If we’re unhappy, that’s understandable, but putting in de-regulators (e.g. Wall Street Gone Wild Again), is that a solution or just a response to frustration?

  16. http://www.bnn.ca/News/2012/6/8/Ottawa-prepares-co... more... [#109983]
    By: Seb (8 comments) Go to top ↑
  17. harsh words from Dvorak for Mr Softy: Windows 8 looks to... [#109984]
    By: Les (7233 comments) Go to top ↑

    harsh words from Dvorak for Mr Softy:

    Windows 8 looks to me to be an unmitigated disaster that could decidedly hurt the company and its future. No business will tolerate this software, let me assure you. As a productivity tool, it is unusable.

    http://www.marketwatch.com/story/microsoft-reinven

  18. ... [#109986]
    By: kaimu (3289 comments) Go to top ↑
  19. ... [#109988]
    By: lowpickr (153 comments) Go to top ↑
    • ALOHA!! So instead of blitzkreig and storm troopers... [#109991]
      By: kaimu (3289 comments) Go to top ↑

      ALOHA!!

      So instead of blitzkreig and storm troopers crossing the Denmark border in 1939 its Merkel’s EU “debtkrieg” of 2012! What’s wrong with private bond holders that bet on Greece sovereign debt going out of business the old capitalistic way?

  20. ALOHA!! One less HFTer to tax ... LINK:... [#109989]
    By: kaimu (3289 comments) Go to top ↑

    ALOHA!!

    One less HFTer to tax …

    LINK: http://cowbird.com/story/1676

    Is the NYSE the US economy?

    • OK, I am lost... are we seriously advocating here that... [#109992]
      By: Vadym Graifer (4341 comments) Go to top ↑

      OK, I am lost… are we seriously advocating here that making a living or supplementing one’s income by trading markets is being a leech (that’s what guy in the link says)? And quitting it is the “right thing to do”? Say it ain’t so, ’cause if that’s what we came to, I am so outta here… and I suspect Bill too, LOL.

      • ALOHA!! I think it all depends on your perspective in the... [#109994]
        By: kaimu (3289 comments) Go to top ↑

        ALOHA!!

        I think it all depends on your perspective in the big machine and what cog you are. My take on the video is this guy says he is a HFT software writer for one of the HB&Bs(he says in Chicago). He probably made his millions off his bonuses over the years and left! He skips that part …

        Maybe this guy is somewhat representative of how some of the cogs at HB&B are starting to feel about their work once they get tired of the “inside job” and are set for life. I can’t think of anything more unrewarding than to sit in a Chicago office all day grinding out HFT code! That’s just me though and I have never tried it so maybe it would be great… NOT! Now that he quit HB&B he can use his computer skills to invent the next iPad app!

        For me I view my own trading as a way to leverage the government and central bank long term destruction of my currency’s purchasing power. If I do well, then I reinvest into start-up businesses that employ people. I have used those profits to fund three start-up businesses over the past 30 years, which is why I haven’t had a boss in 30 years! I think that was my “real” agenda for trading come to think of it! No bosses can be a powerful motivator!! HA!!

        • Kaimu, what one does with money made from trading and what... [#109995]
          By: Vadym Graifer (4341 comments) Go to top ↑

          Kaimu,

          what one does with money made from trading and what job feels rewarding for whom is irrelevant… And in the big scheme of things just as irrelevant is the distinction whether one’s trading algorithms are executed manually or by a computer. Here is direct quote from that rant: “I knew in my heart that I was nothing more than a leech, regardless of how impressive my trading algorithms were.” Maybe it sounds like a hero talk to some – to me it sounds plain offensive. Weird for a trading blog, too.

          • ... [#110003]
            By: Grym (5469 comments) Go to top ↑
          • ALOHA!! Vad-I do not regard the guy as a "trader" like you... [#110004]
            By: kaimu (3289 comments) Go to top ↑

            ALOHA!!

            Vad-I do not regard the guy as a “trader” like you and I are. I regard him as just another cog in the HB&B wheel who happens to write code and devise the next version algorithms. I suspect when he quit he was quickly replaced by yet another of the eager college grad PhD cogs waiting in the wings to make their big buck bonus.

            If anything do not be so selective in your quotes as I also believe he mentions the “liquidity” that HFT provides markets, which is in total agreement to your conclusions. I would have to agree in that sense! Obviously there are many companies traded on various exchanges that are undoubtedly not the “focus” of Chicago based HFT algorithms. I am guessing due to his location he was more focused on commodity related company/indexes.

            I posted that link because it is rare to get “insider” views and it just so happened it was all about HFT, very topical here at the blog. Instead maybe we should contact this guy and ask him to make his own HFT related comments on the blog. One way to learn is from an insider who actually writes the algorithms that run HFT. Maybe Bill or Geoff already know a guy who used to be employed in HFT that would comment here. I am sure the guy in the video has more insightful comments other than his “leech” comment. Besides that is his view of his own life-not yours and not mine or anybody else here at the blog.

          • Kaimu, my last comment on this: On your "do not be so... [#110005]
            By: Vadym Graifer (4341 comments) Go to top ↑

            Kaimu,

            my last comment on this:

            On your “do not be so selective in your quotes” – I don’t believe I am. That quote is a heart of his message.

            On your “I regard him as just another cog in the HB&B wheel who happens to write code” – I don’t know why you’d assume that; small private trading companies represent this field heavily, and I don’t see how they are HB&B.

            On your “Maybe Bill or Geoff already know a guy who used to be employed in HFT that would comment here” which sounds like I am theorizing here. Just so you don’t think I am: I personally took part in design of about a dozen of trading algorithms. None of what I say about algo trading and HFT mechanics is a guess or an assumption.

  21. To provide a balance, there are three problematic sides to... [#109998]
    By: Vadym Graifer (4341 comments) Go to top ↑

    To provide a balance, there are three problematic sides to HFT which are often mentioned along with “tar and feathers” battle cry. Let’s look at them.

    1. Front-running by collusion with an exchange where exchange allows HFT company to see the orders before they hit the market. Pure crime if that happens; not specific to HFT and has to be prosecuted as any other case of insider trading. Prohibiting HFT on such basis is akin to prohibiting streets because murderers may walk there.

    2. Gaining advantage over competitors by putting servers physically closer to an exchange (so-called co-location). Not really sure it’s a today’s problem or problem at all – after all, office in NY had quotes faster then office in Miami in teletype times, too… If one company gains such advantage over another by bribing exchange official – see point 1, put them in jail for a very traditional crime.

    3. Quote stuffing – practice of sending and canceling thousands of out-of-market orders to slow down whole quotation mechanics for slower competitors and gain advantage by having faster computers capable of dealing with those quotes. Certainly disturbing practice but luckily one very easy to deal with. Install a min time interval 1 second between sending and canceling order, and problem is solved. More elegant although a little bit more complicated solution – forbid a computer code that contains sending and canceling order without material event inbetween or sooner than 1 second, whichever comes first. Problem solved.

    Other than that, HFT is simply a case of technology replacing human in those cases where behavior can be automated and speed matters. “Replacing” is conditional word here btw – no HFT program runs without human overseing it, standing by to turn it off or switch to different strategy if situation dictates.

    • 'HFT' traders have simply become another shibbolith for the... [#110000]
      By: Ilya (572 comments) Go to top ↑

      ‘HFT’ traders have simply become another shibbolith for the ‘bad guys’ who keep us from successfully making money in a market that has been disfunctional for the past 10 years or so.

      We could just as easily blame HB&B, insiders and/or the specialists on the floor of the NYSE. Oh wait, we don’t have specialists anymore. I bless them retroactively. They are absolved of guilt.

      To my mind, my lack of success is the fault of the Build-a-Burgers, Rockeyfellers and maybe even the John Birch Society in cahoots with the Clan and the ghost of Richard Nixon.

      The whole HFT debate reminds me of a scene in the movie ‘Cannonball Run’ where Dean Martin and Sammy Davis Jr. are dressed as Catholic priests and pull up beside Burt Reynolds and Dom DeLouise. Dean is driving a red Ferrari and want Burt to stop so they can bless them. Burt says ‘two priests, one of them black driving a red Ferrari and they want to bless us???’ DeLouise replies ‘They’re doing God’s work. In a Ferrari they can just do it faster!’

  22. Jim Grant, editor of Grant's Interest Rate Observer, has an... [#110006]
    By: Grym (5469 comments) Go to top ↑

    Jim Grant, editor of Grant’s Interest Rate Observer, has an interesting commentary citing two authors’ views on our present day malaise.

    Grym

    —–
    For all the talking that Fed Chairman Ben Bernanke does about the Great Depression of the 1930s, he has nothing to say about the not-great depression of the 1920s. It was ugly and sharp, but it ended 18 months after it began.

    “In 1920-21,” relates Benjamin Anderson, a bank economist who witnessed the goings-on, “we took our losses, we readjusted our financial structure, we endured our depression, and in Aug. 1921 we started up again.”

    http://tiny.cc/ufenfw

  23. QQQ SPY IWM Pivot points for the week of June 10th 2012... [#110007]
    By: Vadym Graifer (4341 comments) Go to top ↑

    QQQ SPY IWM Pivot points for the week of June 10th 2012, with comments on last week’s levels and next week’s unfolding events by nemo (I am not responsible for his sense of humor, I suffer enough for mine).

    http://tradinglog.realitytrader.com/2012/06/nemos-

  24. Hi Vad, On your trading log yesterday 6/8 you... [#110008]
    By: Bear E (287 comments) Go to top ↑

    Hi Vad,
    On your trading log yesterday 6/8 you said:
    “Empty day with slow action and no volume.”
    Is there anything in particular you watch to get a read on what kind of day it is likely to be? The market bottomed 15 mins after the open then went up and kept drifting higher all day. To catch that up move would have been quite profitable.
    Thank you in advance,
    Bear E

  25. been tracking ' apa ' for several weeks now... same set-up... [#110010]
    By: baz22 (2875 comments) Go to top ↑

    been tracking ‘ apa ‘ for several weeks now… same set-up is developing that gave 20%+ pops at rig, mos, and pot over the past 2 months.. especially like news of the Kitimat LNG terminal started in May, leveraged by apa, eog, and eca.

  26. Got it, no clear set ups. Sit on hands kind of day. Thank... [#110011]
    By: Bear E (287 comments) Go to top ↑

    Got it, no clear set ups.
    Sit on hands kind of day.
    Thank you Vad,
    Bear E

  27. ... [#110012]
    By: MoKat (531 comments) Go to top ↑
    • ... [#110015]
      By: Grym (5469 comments) Go to top ↑
    • Sanacho Panza finally convinced the Don to accept shock... [#110018]
      By: Ilya (572 comments) Go to top ↑

      Sanacho Panza finally convinced the Don to accept shock therapy. Denial is bad for one’s mental (and fiscal) health. NEXT…

      On to the cork growing port wine vitners.

      This comic opera is almost as entertaining as re-runs of Gomer Pyle.

    • Unfortunately the money will [not] see the inside of Spain... [#110021]
      By: Corner Stone (369 comments) Go to top ↑

      Unfortunately the money will [not] see the inside of Spain. It will be mouse clicked right back into German and other EU banks, doing absolutely nothing and no good for any citizen of Spain.
      I’d prefer they just stack piles of cash in each city square.

  28. I wish I could get a bail out if didn't do my job well, and... [#110016]
    By: indptrader (55 comments) Go to top ↑

    I wish I could get a bail out if didn’t do my job well, and maybe a bonus if that’s not too much to ask.

  29. Ireland demands renegotiation... [#110017]
    By: ea32da32 (2362 comments) Go to top ↑

    Ireland demands renegotiation http://www.zerohedge.com/news/here-they-come-irela…. I’ll be impressed if the market takes this in stride.

    Banking cartel end game; digital money, http://www.theundergroundinvestor.com/2012/06/the-

  30. Mens final now best ever check it... [#110019]
    By: westcoaster (1130 comments) Go to top ↑

    Mens final now best ever check it out

  31. watching with interest on ' amrn ' presentation today in... [#110020]
    By: baz22 (2875 comments) Go to top ↑

    watching with interest on ‘ amrn ‘ presentation today in Philly. on Type II diabetes updates.

  32. ... for US to... [#110022]
    By: Vadym Graifer (4341 comments) Go to top ↑
  33. ... is up. Enjoy your... [#110024]
    By: Bill Cara (4105 comments) Go to top ↑

    … is up.

    Enjoy your weekend.

  34. ... [#110025]
    By: CaptK (71 comments) Go to top ↑
  35. http://www.chicagotribune.com/business/breaking/ch... Hmmm... [#110026]
    By: Les (7233 comments) Go to top ↑

    http://www.chicagotribune.com/business/breaking/ch

    Hmmm where there’s smoke… Legitimate trading in silver…. ya think? But wait:

    JP Morgan Chase is closing the Vatican bank’s account with an Italian branch of the U.S. banking giant because of concerns about a lack of transparency…

    ROFLMAO, you can’t make this stuff up. Aah the weekend funnies.

    ht Max Keiser

  36. ... [#110027]
    By: Les (7233 comments) Go to top ↑
  37. ... from David Einhorn. Perfect description of the circle... [#110028]
    By: Vadym Graifer (4341 comments) Go to top ↑

    … from David Einhorn. Perfect description of the circle of events/market reactions. See attached

  38. Spanish 10 year bond yields have dropped back down to 6%... [#110030]
    By: davefairtex (5215 comments) Go to top ↑

    Spanish 10 year bond yields have dropped back down to 6%, while Italian 10 years are back down to 5.8%. The market loves taxpayer bailouts of banks!

    Man, when it comes to a choice between the welfare of ordinary citizens and bankers, it really is a case of austerity for the people and “as much as required” for the banksters.

    Will bank bondholders be required to take losses this time around? Or will they continue to be rescued at 100 cents on the euro?

    • And yet Greece hasn't left the zone yet Dave. Gawd how this... [#110031]
      By: Les (7233 comments) Go to top ↑

      And yet Greece hasn’t left the zone yet Dave. Gawd how this motley crew of thieves and liars must be crapping themselves as events begin to speed up. Seems we need to be saved at least once a month now. Soon it’ll be once a week.