Ratan; From my angle I see program trading, been seeing it for
some time. It looks to me a big short covering program kicked
in about 2:30..now keep in mind they had as lot of shares to
cover and did so fast as to out run the sellers BUT from 2:30 to the close they averaged getting covered at 1085, This left the ones
who shorted today in a trap..
Keep in mind no matter were they shorted at yesterday getting
covered at 1085 avg gave them a tidy profit..Will the other
shorts try to cover tomorrow..and kick her up so this program
can short again..? Very likely.
----------------------------
There has been both Bull traps and Bear traps laid out by the
program traders, and in the last 3 weeks I think we have set a
new record , I don't see a last min run up as some great
recovery..when most of the volume for the day traded below
the 1085 level..but this could put in a floor for
our trading range in the next few weeks. It still leaves us
in a down trend and we need 1115+ in my opinion to break out
of that channel..while we are along way from any recent high,
inter day we set a new low, lower than any low since March
and that don't make me feel bullish.
I have been trying to out trade these program trading things but
with not much luck, but over all I say we still have a short
term down trend in place, and it won't be happy until
it cuts at least 10% to 15% off of what was our high. It seems to be
working at this very methodical and with a good deal of restraint..
It makes more money if it can torture us slowly than all at once <G>
----------------
<d> The following is a dissertation about Computer program trading,
dressed up nicely with me trying in my most humble
way to say what Greenspam would say, and in the way he would
say it if he were allowed to and could discard the need to be
so political correct in his dissertations.
Gentlemen , I trust this is a privet meeting, and will not
leak to the public or any of the politicians who were so dearly paid
to appoint us to these positions we now hold.
I want to inform you that if we don't soon restrict program
trading it will in time destroy the stock market.
I hope no one will , with an empty mind, content that it's
been around for xx..and has not harmed us, for if one was to
think that they would miss my point.
Gentlemen if you had the data to show the percentage..as I do
then you would see why my contention that program trading is
growing and growing fast..and why we can not compare its past to it,
that's like comparing my kitten of 10 years ago, to the cat she
is now and all the other kittens she had which are now cats..
What was the amount percentage wise of computer program trading
10 years ago..compared to now..I don't have the figures in front of
me at the moment , but feel I can say it was like the food that
kitten ate 10 years ago to the food her and all her descendants eat today..
It's running about 20% of the volume now, ( I feel that should be
curtailed not just with price circuit breakers ) but
with volume circuit brakes as well,,when computer program
trading at any time during the day hits 10% it should be
halted until enough additional volume trades that day to
match the amount of volume prior to the halt. This would at
least be a start in the right direction , however If it were up
to me I would not allow it at all as it's effect is harmful
to the basic premise of having a stock market to begin with.
If you will bear with me for a few moments I shall try to make
my reasons understandable to you all.
------------------------
The SEC, myself, and those other Powerful Pillars of our Stock Market System are not so stupid as to not know this. But we are
forced to put the short term money we can pilfer ahead of any principle, the general public can't do any thing to change
this , and at best they are stuck with trying to fight fire
with fire but at a big disadvantage. And somehow I feel that is the way it should be, but I do have concern that the program trading is
killing the goose that lays our eggs.
---------------------------
I know myself and all Government officials are culpable and that
behind the scams we the SEC and Fed and all hold hands with,
kiss, and get in bed with the Wall Street Magnets, while giving the public, lip service, and sugar coated words that cloth our
vile predatory nature in garments less than the evil old tricksters
we are.
------------------------
Gentlemen my talk here today is not so much to enlighten you of
our darker side nor to enlighten the public, who we all know
prefer to live in the dark, but to express my concern that the
growing program trading could be the making of our beloved
stock markets coffin.
------------
As we all know ownership of a stock means one
ouns part of that company, the market places a value on said stock.
That value is in the long run going to be dependent on how well
the company does , and what degree of success it has in growing
and making a profit.
All that is wrapped up in that piece of paper we call a stock,
while the market may not agree on this value it becomes a voting
place among the owners and hopeful owners of said stock.
Of course we all understand if enough stocks did not grow in value then
the stock market would wither and die from lack of interests, like
it almost has several times. ( maybe Greenspam would not say the
last part of that sentence).
--------------
Gentlemen what I just said, will I'm sure; cause what I'm about to
say comprehensible to all or at least as clear as muddy water ( waits for a laugh )
---gets a subdued hehaw and giggle--
---------------
Well the value of the stock being that it ultimately contains
the intrinsic value of the company and it's ability to profit,
is handicapped every time it trades. It cost money to trade the
stock and of course there is the "spread" that must be collected
with each trade so that the Machine can be profitable enough
to allow us to all live comfortably with no more effort than it
takes for us to dream up some new twist to add to this ponzi
scam we have going.
----------------
The program trading is putting such pressure on the market now
that I'm afraid we will not be able to invent fast enough new
gimmicks to keep our little pie in the sky floating for much
longer if we do not take some action to curtail it, maybe just
maybe that nut who was trying to warn us about technology by
sending out bombs had just a drop of sanity about him.
---------------------
AS I have stated each time a stock trades that has some
over head in it, and that over head must be overcome by what
the public thinks is the intrinsic value, ( at best each stock
has about an average of 12.5 cents of over head added to it every
time it trades hands.
I have checked all the outstanding shares against all the volume
of trades made in a year, and have come up with a staggering
figure that if the public catches on to it we could be in deep
do . As you know some Mutual Funds do not trade, or churn a lot
of issues At least form a tectical stand point but many do not
call it churn if they buy and sell the same company a 1000 times
a year. Others just churn away and index funds are buying and
selling the same issues sometimes a 1000 times a week..well maybe
not that much but you have the idea. I mention that because you
will notice that most index funds do not claim to have much
turn over yet they are the ones most involved with program trading.
As they try to match the index ( and many of them do a very good
job indeed ) they are forced to buy and sell issues like hot cakes
to match the inflows and out flows from investors and
also all the internal expense including fat checks for themselves
and their help yet still stay perfectly in tune with the index.
Just to name a few right off the top of my head , we have
the DSPIX, MUXAX , SCPIX, SINEX PEOPX and many more that go
step for step with the S&P 500 , oh I don't want to leave out
the SPY, now that is just a starter we have Mid cap Funds that
step with the MID Cap 400, as well as numerous other sector
funds that step exactly in step with a sector index.
Just to watch them stay so perfectly in tune with the index is
a marvel of course if you just give it a little thought you will
see that to do this they must pull more than a few rabbits out
of the hat. You see as they watch their cash flows come and go
they do a sort of front running to adjust their NAV to match the index, and it also takes an extensive amount of what would be
called churning, except for the technicality that they are just
churning the same issues over and over, and doing it well enough
to cover expense and so on, on some days they may buy , sell , short, & cover, every issue they have 4 times or more using this
big computer that spits out whole baskets of orders faster than
you can spit out water melon seeds.
Gentlemen on the surface this looks harmless enough, but as I look
deeper into it I see were it is causing us a growing problem.
We did not have these indexers as I call them , when program trading
first started then some one figured out how to do it, then another
saw him and figured it out , then another and now we have them sprouting up all over the place and more of them coming on line
faster than my wife can give me Viagra.
( every one laughs and Greenspam smiles , and puckers his big
fish type lips and says, yes I know that sounds funny it was
meant to..but gentlemen when you hear more of this you will see
it really is not really a funny matter.
Remember I said I was checking the amount of shares outstanding
against the total volume, and keeping in mind that on the Nasdaq
each share is traded twice from one person to the market maker then
from the market maker to the next person, so I had to cut that
volume in half. Well Gentlemen my findings are not complete but
close enough that I can inform you that every share in existence
that can be traded is traded about 40 times a year and that is
increasing very fast. Now I don't mean each individual share,
as some of them by them selves may not be traded for years,
but so many of their blood sisters and brothers are traded so
many more times it is as if they were traded. You see the
overhead I'm talking about is transferred to the whole family as if
traded each one were traded 40 times a year.
I have to use averages here to give you the picture of the problem
as I see it. At best the intrinsic value of each issue of stock has
on an average of $5 a year added to its over head that some how the companies have to overcome by making more profit or telling better lies, and this rate is climbing fast.
So while we have an average price of all stocks running about $47.50 at this time if you lump them all together like food does after you eat it. Well as you can see in nine and a half years hypothetically there is more cost built into the trading of the average stock than it's even worth.
But we are safe as long as the public don't know about this, for as
long as we keep getting new blood our pyramid scam will continue
to work, and it's complicated enough that no dares to call it
for what it is, however these program trading systems are speeding
up that nine and a half year window of trading cost out running trading price..I estimate in the near future it will be only four
years and then shortly there after two years, this is going to
exert an extreme draw on our talent to spellbound the
public into playing our game and they might start to question
things we hoped they would never question.
Many of you wonder what would happen if even 10% of the public
were to want to cash in their shares at the same time, I'll tell
you one thing I know would happen is I would quit this job and
fly to Grand Cayman Islands before even half that many got cashed
in. And I might add I keep a suite case packed. Not that I expect it to happen but just in case.
Actually it would not take 10% of the people cashing in
if we fail to get at least 5% more new blood in any year
over the amount of ones that cash in any year I can safety say
the whole thing will grind to a halt.
We can forestall this if we will do something to slow down the
amount of computer trading programs that can come on line,
if we do nothing we can all join hands and sing good bye
American pie as we board the air planes that will fly us
to safety.
--------------
Lets not forget it was not all that many years ago that President
Bush almost had to shut down the entire Federal Government..
Thank you..
OK so you don't think Greenspam would say those things, well at
least not were you could hear them , and you think he would use
more five dollar words, well he might but then again I bet he
wish he could let his hair down and use some regular words
from time to time . <G>
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