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Strategies & Market Trends : Classic TA Workplace
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To: NOW who wrote (57105)10/20/2002 1:57:08 PM
From: GraceZ  Read Replies (2) of 209892
 
The transfer of wealth that the above firms are trying to make is between each other. The bulk of the money at any given time resides within the confines of the biggest market dealers. The public traders like you guys here in total amounts to a rounding error in any one of those firms P&Ls.

How the hell do you get people who are fiercely trying to steal money off each other to cooperate to take the market in one direction or another? The fact that they tend to move in concert has more to do with the fact that they understand that it is far more profitable to ride the horse in the direction it's going, whether up or down.

The fact that the Fed coordinates its market actions with the member banks has to do with doing the job it was chartered to do. You can look at the RPs and try to make a connection between them and market action and there is, but what most miss with their conspiracy bias is that it isn't causal. A rally creates increased demand for funds, an increase in instantaneous demand for funds raises interest rates. The Fed defends its interest rate target with temporary infusions, RPs. So which comes first the rally, the increased demand for loanable funds or the RP?

If you were to track the futures movements against the day's action I think you'd find that they are just as frequently wrong in predicting the day's market action as they are right. Otherwise one would be entirely justified in simply watching the futures and placing your bets for the day. I dare say you wouldn't last long with that particular strategy.
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