HFT And DaBoyz Manipulating The Markets Again

Midday Market Commentary For 08-10-2012

No sooner than I published my opening commentary the markets unexpectedly skyrocketed from the morning lows to those mid averages of the past 3 sessions. Thus turning a negative market into one not as negative. Still down but only fractionally. Lots of green volume but prices fluctuating rapidly in large swings. This is looking more and more like HFT (High frequency Trading) providing this unnatural liquidity flow and price fluctuations.

A quick check among the traders I know shows none of us are trading and everyone is suspecting HFT too. There was no International news and suspect a rumor bumped the algos into working the markets up. Each 10 minute time slice was leaving a modified inverted hammer candle. Although bullish in nature these do not remind me of a natural climb with human trading and smacks of computer algorithmic gyrations.

Today’s swings are not all that much considering the DOW’s swing has been 70 points and the 500 is only 7 points which enables the HFT and other nefarious manipulators to control the market. Best to continue to sit on ones hands and continuing to monitor the action. As mentioned previously the SP500 could bump up to 1415 without breaking the bullish trend so caution is warranted to my bearish friends jumping in too soon.

The RRR** is again narrow and profitable trading is unlikely today. Even guessing the swings would not provide a comfortable profit cushion. Swing trading is still on the fence. By 10:45 the markets turned around and started to melt down after reaching yesterday’s closing numbers.

By 11 am the DOW was down 40 points and a few minutes it had melted up 17 points and then stabilized all within a few minutes. HFT is the culprit today making a mockery of what is supposed to be a market place. The folks at the HFT centers are hell-bent to create another ‘flash crash‘ and screw the market up once and for all.

The DOW at noon is at 13151 down 13 or -0.10%.

The 500 is at 1401 down 1.65 or -0.12%.

The $RUT is at 800.31 down 2.60 or -0.32%.

SPY is at 140.41 down 0.21 or -0.15%.

The trend is down and the current bias is up.

WTI oil is at 92.87 trading between 93.70 and 91.75 and the bias is neutral.

Brent crude is at 112.69 trading between 113.35 and 111.32 and the bias is positive.

Gold is up today at 1621 trading between 1626 and 1605 with a neutral bias.

Dr. Copper is at 3.39 down from 3.42 earlier.

Earlier the USD rose from 82.59 yesterday to 82.92 this morning and is at 82.58 having fallen to 82.50 a short while ago. A lot of gyrations today that mean next to nothing as they are taking place within narrow parameters.

European markets closed down today in the wake of negative news coming from China and the EU. The FTSE 100 in London is down –0.08% while the German DAX is off –0.29%. The CAC 40 in France is also off at –0.64%.

The Asian markets closed down with the Hang Seng at –0.66. The Shanghai Composite down –0.24%. The Nikkei down –0.97%.

@dailyfx:

Volatility figures suggest that complacency is at an extreme level and most traders will probably be surprised by the events that unfold over the next few weeks.

Data released in the overnight suggests that global growth is slowing more than expected, weighed on by the fears of a hard landing in China and rapidly slowing inflation in Germany.

** RRR = Risk Reward Ratio

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Written by Gary