August 13th, 2011
by Guest AuthorDavid Grandey, All About Trends
With the media starting to use the word MACHINES when referring to who produced the volatile action, please welcome NEO from the movie “The Matrix”
In all seriousness though it’s quite the fitting picture if you ask us. Here’s a guy who has bullets of fear coming at him and he just doesn’t lose his cool. Talk about a role model to model for volatile times, huh.
Follow up:Tuesday is a good example of just why it pays to not react. I get short term bullets thrown and fired at me every second of the day.
Last week David talked about the Prop Desks, HFT’s (Area 51) and how news event days get straddled, David even mentioned how Fed Day’s the same thing happens and why we see big swings in both directions right after the announcements all par for the course in “The Matrix”.
Tuesday was no exception. Once the Fed announcement came the markets did what they always do and that is big swings in both directions (think bullets coming at you, think straddles). BUT if you honed in on your holdings you’ll have seen that the bulk of the current holdings stayed up throughout that whole time band. That’s the power of not reacting, you look at what are your stocks actually doing.
Now we want to introduce you too another pesky vermit from the Matrix whom we call the Sentinels, most of you know them as Trade Bots. These are little programs that go out and look where all the stops are. Tuesday’s drop to new lows was a classic POP THE STOPS by the trade bots. They know where all the money is with hard stops and they ALWAYS pop those people, trigger their stop losses, then suck up the supply and away we went.
NOTE: See what we have developing here? A potential REVERSE HEAD AND SHOULDERS bottoming low in a micro frequency much like we talked about, as in it’s gotta start somewhere. Keep in mind in the SPX and COMP there are gaps back there that probably will get filled, but who knows the way the Matrix is trading.
By the way, the Tradebots are employed by Area 51 type folks as a nano algo strategy, in case you were wondering. They are just programs in the Matrix
We bring you this information because these are forces that you need to understand as THEY are the ones that cause the much of the chaos (and opportunity too). By understanding and knowing about them, it allows you to gain knowledge of them and not fear them. What is that phrase?
Knowledge is power when used effectively.
Welcome to “The Matrix”
Handle the Debt Downgrade like the Smart Money Does by David Grandey