Donald ; I too found the premium on the NDX options too high for
me to play, and they ( the floor traders ) skew them a lot.
The QQQ options don't look as liquid and don't move as fast
are cheaper , but in watching them I see they also get skewed .
( they don't move in step with the qqq it must be
the liqiud problem ).
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I didn't get in on Fridays move up, but I didn't get caught
short . I mostly play the UOPIX or USPIX, often
against a long or short on the QQQ when the NDX goes aginst
the Fund I'm in. ( untill I can unwind from the fund )
---------------
My new Dollar Volume Index showed me this move but I was not
use to it enough to trust it that much.
Using it and the dollar flow on the most active I find
AUG 3rd was the worst day, and my DVI hit bottom AUG4th
AUG 5th was heavy buying ( 168% ) on the normal dollar
volume , then AUG 11th they bought again 128% on $volume.
yesterday only had 89% $volume, while it was up a lot
I question the low volume.
----------------
I'm sure about half of the rally has been from shorts taking
profits. The other half Mo Mo buyers..
I try to picture 2 sets of shorts the early ones and then the
late ones. THe E shorts are market makers and broker/dealers
who work out of a short position most of the time.
Often they don't stay short long and cover as the L shorts
come in,( E shorts close their position as L shorts come
in )
What most people don't realize is on these active stocks
short positions are being swaped more than long positions,
INTC is the most shorted of them all. A lot of the high
volume is one short buying in to close from another one
who is just opening. Broker/dealers have an advantage as they
each at least know the running inhouse short level.
There is short data we never get to see except once a month
and it's almost worthless by the time we get it.
I use to service some computers for broker & they have information
that the public never sees, hell they have a cinch.
------------------
Well I haven't been running my DVI long enough to know what
to make of Fridays move the flow was positive ( but in $volume
only about 1/2 of the 11th ) all in all she looks up but with
less Mo Mo now. What I do like about my DVI is it shows
the bottom was hit on the 4th, and the 5th was heavy accumulation.
The indexes did not show that as the qqq only dropped to
107 on the 5th, but it was bought heavy at that price.
On the 10th the QQQ droped to 105 but closed at 108.25
on the 11th they bought the stocks again at 128% $volume
but I now see they sold the QQQ some to do it.
----------------
My DVI does the old "follow the money thang"
tracking Price X volume it makes a composit of the
most active. While we went up strong Friday it did
show some selling into the rally..and it's easy
to see when they are buying the bottom. The selling into
the rally was with stocks, but some of that money moved
into the QQQ; all in all it was positive but not as much
as the NDX made it look.
Not seeing this before I don't want to make a call for
Monday, just a guess says a small dip then more upside.
Jim
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