Sunday, October 24, 2010

Alcoa - AA

12.71 critical support. Still above the 200 Moving average. Uptrending.

Saturday, October 23, 2010

High frequency trading

An interesting article on HFT. There are new participants in the market and we should understand them very well.

Here I extract the most important paragraphs. To read the complete version, click here. (CBSNEWS.COM)

Just four years ago, high frequency traders accounted for 30 percent of the stock trades in the U.S. Today, estimates range as high as 70 percent. And institutional traders, like Joe Saluzzi of Themis Trading LLC, have come to believe that the game is rigged. 

Today it is still the public façade of Wall Street, and a television backdrop for reporters relaying financial news.  But less than 30 percent of the trading is conducted there now, and the specialists and the noise of the floor is being replaced by the speed and quiet efficiency of computers, and the action has moved elsewhere. 
There are now more than 80 alternative trading systems around the country, plus two brand new electronic stock exchanges which most of you have probably never heard of: BATS and Direct Edge. 
They're owned by the big banks and by high frequency trading firms, and neither of them would give "60 Minutes" an interview or let us inside to film their operations, but they trade more than a billion shares a day at blinding speed, and most of those bets are being made by machines. 
The players range from firms like Goldman Sachs, Barclays, Credit-Suisse and Morgan Stanley to hedge funds and smaller operations like Tradeworx, which is the only high frequency trading firm that would talk to us or let us in. 
It's run by Manoj Narang and a small group of mathematicians and scientists called "quants," which is short for quantitative analysts. Their high speed computers trade 40 million shares every day. 

Actually, high frequency traders are getting the same market information that Saluzzi gets. They are just getting it a little bit sooner - it's only a few fractions of a second sooner, but if you are running supercomputers, Saluzzi says, it can be an eternity. 
"What you're saying is the people with the fastest computers have an advantage? They get the best deals?" Kroft asked. 
"Every time. Absolutely. There's no doubt about it. I mean, if they're spending that kind of money, and they're using that type of infrastructure, they're doing it for a reason. And it is to get a speed advantage, in that respect," Saluzzi replied. 
It's not just the speed of the super computers that's important - it's also their physical location. The closer they are to the stock exchange's server the quicker they will be able to get critical market information. 

"Do these high-frequency trades have anything to do with market fundamentals?" Kroft asked. 
"Valuation is irrelevant. It's all about just moving the price up and down the ladder all day long. Each day is new. Each day starts fresh. So, you have to question the true valuation of the markets now," Saluzzi said. 

Wednesday, October 20, 2010

Wall Street Journal: Why Letting the Dollar Fall Could Be a Good Thing

In this video, the economics editor of the WSJ explain the reasons why the falling of the US dollar affects the equilibrium in the international trade, particularly with the developing world and why Bernanke did not make this strategy public.

Monday, October 18, 2010

Another strange move in NYSE

Take a look at this explanation in Bloomberg on what happened today in the SPY. Some important paragraphs:

"Data published by the electronic venue at 4:15 p.m. New York time showed the SPDR S&P 500 ETF Trust at $106.46 compared with its opening price of $117.74. The apparent plunge in price involved 7.2 million shares in the closing auction on NYSE Arca, according to data compiled by Bloomberg at 4:30 p.m."

"The 104-page study released Oct. 1 said trading software known as an algorithm linked the rate at which it traded the E- Mini contract to overall market volume. The initial sales spurred a flurry of buying and selling among high-frequency traders, which in turn led the algorithm to sell faster."

Another proof of the weak controls in this market.

May be today we have a new millionaire...

Nyse breaks trades of S&P 500 ETF showing 9,6% plunge

Saturday, October 16, 2010

Krugman and the bond bubble

In this post, Krugman explains why the bond bubble have it roots in the low CPI and the high unemployment rate. Enjoy.

"The Taylor rule and the 'bond bubble'. Wonkish"

SPY: updating elliot wave count

Updating my EW count from September 1st, this could be the road-map. If the market is following this pattern, we are now in the wave 5, wich should take us to 140 SPY. But without the help of the financial sector (the XLF, and specially the big banks, are underperforming the indexes) the risk is high.

Monday, October 11, 2010

DIS: Walt Disney Co

Some keys of Disney (source: yahoo)

GE: opportunity to get in or get out

Look at the doji, the long red candlestick and the bear divergence in stocastics. But the target of this pattern (the inverse head and shoulders) is 19,25. And then? Long or short?. We should wait until the close of the market to make a decision. May be is a buy with SL @ 16.50


A break above 37 is a buy.

Global Markets Heat