Friday, February 5, 2010

What happend at 3.05pm? SPY ghost rally (SPY)

Your guess is a good as mine, I do not believe it was simply "Friday short covering" something else was going on. The school of fish did not just decide to cover their shorts at exactly the same time within 3 minutes of each other. Like everyone else, this move caught me off guard as well, fortunately i was flat going into this move. I had been taking off shorts lightening up on all my puts spreads just before this happened. The VIX collapsed in seconds causing the price of options to collapse, if you were short VOL great, but many people were long vol not expecting the PPT to come in and run us up into positive territory with ZERO catalyst.

Per my research into the trades, you can see in the chart above there were around 8 million shares traded in the SPY within 3 minutes (liftoff) which equates to roughly 850,000,000$ where did this money come from? What account executed this trade? The answers to these questions will probably never be known though what is obvious and disgusting is clearly the PPT wanted DOW to close above 10,000 for psychological reasons. Give it up, let this market trade this cannot go on forever, people are starting to catch on. With threats of regulatory reform within the year coupled with the recent dollars strength, the market has clear headwinds. Blatant market manipulation has to stop, until it stops the street will not have full confidence in our capital markets.

UPDATE: ZeroHedge posted a great article highlighting the JPM desk gunning the SPY... 

Go Colts.

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