Wednesday update

SHORT TERM: gap up opening, pullback, then DOW +1086

For the first three days of the week not much happened in the foreign markets, as most were closed, or open a limited time. The US market, however, was a bit different. Even though there was a half session on Monday, the market tanked to SPX 2351 at the close. Down 65 SPX points on the day. Today was a totally different a story. The SPX closed at 2468: +4.96%.

On March 4th 2009 POTUS Obama stated to buy stocks because they were cheap. The 2007-2009 bear market bottomed only 4% lower and two days later at the infamous SPX 667. On Monday Treasury secretary Mnuchin convened a meeting of the Presidents Working Group (FED, SEC, CFTC and Treasury). On Tuesday, Christmas day, POTUS Trump stated to buy stocks because they are cheap. Did the market respond to the POTUS or the PWG? Keep in mind POTUS Trump tweeted on December 4th that he is the Tariff Man. The market promptly dropped 15.9% over the next three weeks.

If today’s activity was because of the PWG, better known as the Plunge Protection Team, there is certainly more upside ahead in the coming days and possibly weeks. Managed
Markets for a Managed Economy (MM4ME). The rally from today’s SPX 2347 low, the 7th consecutive day of new downtrend lows, looks like three waves thus far: 2414-2394-2468. Short term support is at the 2456 and 2444 pivots, with resistance at the 2479 and 2525 pivots. Short term momentum reached quite overbought during the rally. The daily RSI just came off its lowest level since the 1987 crash. Best to your trading!

MEDIUM TERM: downtrend

LONG TERM: downtrend probable


About tony caldaro

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524 Responses to Wednesday update

  1. lunker1 says:

    SPX potential 60min 3BR sell from 2500.89 would confirm with 2:30PM close below 2488.52

    • aahmichael says:

      That’s incorrect. The current 60min bar has to close below 2486.42 at 2:30pm for a 3br sell signal to be given. Also, if that were to occur, then the sell would not be “from 2500.89.” It would be at whatever price it closes at 2:30pm.

      • lunker1 says:

        my error 2486.46
        the second part is semantics
        your words. you covered your short on “the reversal off of 2346”. inserting the word reversal in my sentence is redundant since 3BR already is a reversal. A 3BR (reversal) sell (not a short) off of 2500.89

          • aahmichael says:

            Geezus, how dense can one person be that you can’t comprehend a simple 3 bar pattern? Nothing failed today in regards to a 3BR, because no 3BR existed today (prior to the one put in at the close.). The 3BR is a specific pattern consisting of 3 bars. Until there are 3 bars that fit the pattern, then the pattern doesn’t exist. When there are 3 bars put in that create the specific pattern, then THAT is the signal. There is no preliminary setup. There is no preliminary signal. There is no confirmation required.

            Also, in regards to your reference of my post where I mentioned that I covered my previous short, I never said anything about a 3BR. This is what I said, “I covered my short position this morning after the reversal off of 2347…” It’s bizarre that you took that sentence and then distorted it, and then applied it to some sort of new 3BR rules.

            • aahmichael says:

              Note: “prior to the one put in at the close” should have read “prior to the one that could be put in at the close.”

              Even though the was a 3BR put in at the close, I didn’t know that was going to happen at the time of my reply.

            • lunker1 says:

              Personal insults eh? Relax old man. life’s too short.

  2. gary61b says:

    Phil, ASA what are you doing? Are you two entertaining Brian or visa versa

  3. fionamargaret says:

    $WTIC down to 34
    DWT up to 26

  4. purplember says:

    2472 .38 special hit

  5. NEWBIE says:

    Oil experts / Lee / Phil are we close to a bottom on crude?

  6. chrisk44342 says:

    To those DHers on here, this is why i use a closing price to assess stops, etc with DH approach. Obviously this is a daily chart but I do the same thing on 15 min, hourly charts when trading. There is a ton of whipsaw/long wicks around these levels and using a closing price helps reduce them to a large degree. Will you lose out on opportunities or potentially have bigger stops? Yes to both. IMO this is more than offset by the gain in reliability.

  7. Derek P. CT says:

    Hi Tony, any possibility that this entire bear market is over in your view? I am considering major 2 could be in depending upon how this rally shapes up.

  8. purplember says:

    Tony, Are you close to thinking Int A is complete or what level are you looking for ? thanks and i hope you have a great new year.

  9. stockop says:

    Mcg: did the FTSE put in a reversal today or too early to call it final? looks like a clean one right back over the trendline. and yet the Dax still looks weak.

    looks like the us indices hit their trend lines from the December 03 highs and are failing as of now. call buyers are out but retail is holding back so far. need to see a little more action myself before i commit. not gonna fight a break of the US.

    • mcgcapital says:

      I don’t see anything bullish about recent moves.. we literally just broke down the 2018 trading range only last week on US markets, would be amazed if that’s a one week event. It’s the same as when we consolidate for months, then break out to new highs, then a week later saying have we topped yet.. the probability is against it

      As for FTSE, it’s volatile but keeps making lower highs.. 6780-6800 would be the line in the sand to keep that intact short term. I’ve been exiting longs on it today and entering shorts. I expect it to keep making lower lows in January

      • mcgcapital says:

        Would also say that if I was going to speculate long against the downtrend, I’d try and do it near the bottom of the range to trade against, or on a reversal up from fresh lows.. don’t see a set up entering or holding them once you’re within 50 points of the prior swing high. If it breaks up, it breaks up.. can always go long at that point. It’s an expensive 50 points to hold for.. I think it’s got a negative expected value

  10. Page says:

    Don’t expect market to go down in afternoon instead buyers will take over this market later in day.

  11. jason hardy says:

    Pardon my ignorance, but what is the “TMT” and “SCT” on Tony’s daily SPX chart?

  12. vivelaamo says:

    Looks likes a bottom to me…but then I guess it would. 200 weekly sma was always going to hold.

  13. Jack Lad says:

    Gold going for corrective wave 2 supports the equities bounce.
    Grand Jury to hear evidence that proves that 9/11 was an inside job.
    If these maniacs are cornered they will probably go nuclear.

      • Jack Lad says:

        Received with kudos. Added George the son of…
        Hit me with your rhythm stick.
        Kudos: usage: kudos entered English in the 19th century as a singular noun, a transliteration of a Greek singular noun meaning “praise or renown.” Used largely in university circles, it became popular among journalists in the 1920s, esp. for headlines: Playwright receives kudos.

  14. lml25 says:

    One thing to watch tomorrow –for me–is if SPX can avoid a 25-30 pt loss (estimation)and keep the slow stochastic over 20,it should lead us up about 3% to 2550ish pretty quickly.That’s initial resistance,but a leap above that could mean 2620 .First things first.GL all.

  15. lunker1 says:

    *** you have reached the END of the Internet***

    all those really looong posts down below have used up all the memory so the Internet is now CLOSED.

    please try back later
    and clear your cache
    thank you


    Tony’s Rules

    1. max three posts per day
    2. post your market view
    3. don’t clog the blog with news or politics
    4. post links, not articles
    5. be kind. rewind. 😀

    if you have a really lot to say (many long posts 🤯) then start your own free wordpress blog and have at it. then post your link to your daily thoughts. its super easy


    • N I C E …….such a diplomat

    • lunker1 says:

      6. this isn’t a Chat board so don’t post EVERY SINGLE thought. consolidate your market thoughts into one or a couple posts a day, (or post a link to your blog with your every detailed thought).

      charts are great!

    • stockop says:

      Apologies to Tony for clogging the blog today. Went off on a tangent and will be more careful going forward about my posting.

      Glad to see you haven’t been the blog SS recently and are actually giving your market views Lunker. Today definitely warranted a reminder.

    • mcgcapital says:

      At least Bluehorse and Stockop post decent content. If somebody wants to be a blog policeman they should set up their own blog, rather than appointing themself to do it on someone else’s… and I can see your monitor way more than 3 times today so stop being a massive hypocrite

      • Valerie wapiti says:

        I really like reading Blue and STop’s posts. Perhaps Lunker prefers the endless opera/music/vid posts?

        • Hi Valerie,

          In regards to your post last night about whether or not TD Ameritrade uses 3rd party execution services and receives payment for order-flow…

          Yes, TDA receives payment for order-flow for equity trades from the likes of Citadel Execution Services, G1 Execution Services, Virtu Americas, and Cboe EDGX. It is all properly disclosed by TDA on their website and also states the amount of “rebate” that TDA receives for providing “liquidity”…. which is usually around 1/10th of a penny per share. TDA has been announcing their order-routing data statistics since the summer of 2014.

          Brokers like TDA and Schwab use 3rd party execution services because they believe that it lowers costs, improves execution speed, and increases liquidity. These 3rd party execution firms are called “internalizers”. TDA and Schwab release a quarterly report pursuant to SEC Rule 606 on their order routing practices. It can be seen here:

          As you can see, Citadel Execution Services makes up about 43% of TDA’s total orders. It has been said that Citadel makes up for about 35% of the average daily volume for Retail orders.

          Interestingly enough, there has been a class action lawsuit filed against TDA (that can be searched for on the web) that has recently been given the “green” light to proceed by a Federal judge in Omaha in which TDA customers claim that they were not given “best” execution.

          “Best” execution can be summarized as trades being unfilled, underfilled, filled at a suboptimal price, and/or filled in a manner that adversely affects the order’s performance post-execution.

          Obviously, given decimalization we are talking about “pennies” here.

          Here is the Judges Order:

          FWIW: I use a Retail platform for most of my equity trades but have access to Level-2 quotes and am able to utilize Direct Market Access (DMA) to various ECN’s.

          Hope this helps!

          • PS. I believe where Stockop gets confused in his “claim” is that he does not make any distinction between firms that are clearly broker/dealers (like Citadel, Virtu, Two Sigma, etc.) and registered as such with the SEC…. as opposed to a large (what we call “buy” side) hedge fund that is quant-driven such as Renaissance Capital, DE Shaw, or Millennium.

            Two Sigma Investments and Chicago based Citadel LLC are some of the few hedge funds with SEPARATELY managed market making arms….. Two Sigma Securities, LLC and Citadel Securities, the later formed in 2002.


          • Valerie wapiti says:

            Great to see your reply. So, using nvda as an example, a HFT ‘customer’ has the ability to monitor trade activity in nvda at any given time of a trade day? If a number of TDA clients place buy (or sell) orders around a narrow range and a notable number of placed orders get filled the HFT customer can see the crowded trade and manipulate the stock price to a sharp enough extent that stops are hit and/or less knowledgable traders scramble to exit their position? I really have homeworked this and have yet to find a clear succinct response. Thus my asking you. And no, I do not try and trade for a living. Get to play the market in the coldest months of the year and bust ass working O&G rest of the year. Cheers.

            • Valerie, first off there is no risk that an Execution Broker for TDA can manipulate a share price due to “seeing” resting limit orders in a “crowded” area because they are not allowed to trade against public orders in the first place. For obvious reasons, that is totally verboten.

              Where HFT’s wind up abusing the system is through the use of special order types. (its not enough that they have a speed advantage over the higher latency market participants like you or me). Some will even blast an ECN with a massive amount of “orders” that they immediately cancel…. thereby slowing down the order book and creating even more latency for the retail order that is seeking execution. This is called “spoofing”.

              There are constant “games” going on where the algo’s that utilized HFT’s are “testing” various levels of liquidity at an ECN or across a range of ECN’s. (there are 13 ECN’s out there these days) – – – They can do this with special order types, like an Intermarket Sweep Orders (ISO). It’s an HFT’s way of using computer commands to tell Exchanges how to handle their bids to buy and offers to sell. There are literally hundreds of different types of orders like this. As a result, these order TYPES serve to give preference to HFT’s over the public “retail” investor.

              Since order protection via Reg. NMS protects the “top of the order book”, an algo HFT participant can literally blast through an entire order book via an ISO order and create a “Flash Crash” in a stock, given that an ISO only needs to “sweep” away the top of the book of an ECN.

              There is also a Post – Only ISO order that will only interact with liquidity if it can get a rebate. This is where it gets kind of complicated, because the sender of a Post-Only ISO gets their order rejected back to them if there exists contra-side liquidity. It’s almost like getting a “free” look that there is selling interest out there, without even having to incur any kind of economic toll to find out.

              Like I said, the market structure and various order types across 13 ECN’s (never mind the 85 “matching” engines that most brokers and banks use that meet the definition of an Exchange, but are not required to register as a National Securities Exchange, called Alternative Trading Systems, ATS) makes for a very complicated market place.


              Joe Saluzzi and Sal Arnuk, the co-founders of Themis Trading have written a book about all of these kinds of “predatory” orders with the HFT crowd entitled BROKEN MARKETS, written in 2012.

              Might be an interesting look into the HFT crowd for you.

    • schizo1688 says:

      thanks lunker1, damn it , you made me used up 1 precious post already

    • Sorry Lunker. I’m obviously new here and was not aware of the 3 posts per day rule. Guess I’m done as of this post.

      I was just trying to clear up some terrible “misconceptions” about various market participants and market structure. Hope some people here found some “value” in my posts. 🙂

      • stockop says:

        I learned alot. Thank you for so willingly sharing your knowledge.

      • lunker1 says:

        Blue you posted good stuff just a lot to wade through to find Tony’s intraday comments and replies which most find valuable

      • aahmichael says:

        Ignore Lunker and keep posting. You’ve added much needed quality to the comments section of the blog.

        • mcgcapital says:

          +1. Lunker will say anything to justify his OCD policeman role. Too many inconsistencies. Tony’s comments are obvious as they’re in a different colour to the rest for a start. He has a problem with people posting length or quality. It’s obviously because he’s incapable of adding the same value so he’s jealous

        • Thanks Guys!

          I remember when I was a younger trader just starting out and trying to soak up everything I saw and read like a “sponge”…. so I enjoy “giving back” and sharing my knowledge base when I have the time.

          When I first started out, we didnt have computers in 1980 so if you were a “technician” and you wanted charts, you would subscribe to William O’Neil’s Daily Graphs and they would be delivered every weekend to your doorstep for $500 a year. As a young college kid, every weekend getting that chart book from William O’Neil was like Xmas morning! What was super cool was that my Dad’s broker (at Shearson) allowed me to hang-out in his office during summer vacation’s and holiday periods from college…. and we would just stare at the QUOTRON screen all day long watching the quotes. Because I was trading a lot of stock options in a small joint-account with my Dad, my Dad’s broker didnt mind. He enjoyed the commissions! 🙂

          I first started out trading penny mining stocks and oil/gas names from the “Pink Sheets”, which then of course lead to stock-options…. which then of course lead to trading stock-index futures. Everything was sent via the wire operator at the brokerage firm. But if you traded at least 5 stock-index futures at a clip, the Broker would be able to phone your order straight to the Exchange. If my memory serves me correctly, the commission was somewhere around $20 – $25 per contract back then.

          Things are certainly more complicated these days given all of the ECN’s out there and the move away from the designated “specialist” system that was the hallmark of the NYSE “open-outcry” structure until 2005.

          Obviously, there are now a ton of computerized strategies involving HFT’s and algo’s. I think that one concept that often gets missed on blogs about the stock market is that ECN’s attract liquidity by paying a REBATE. They pay the rebate so as to attract standing limit orders. So, if you put in a limit order to buy or sell you get a rebate. Conversely, if you hit a bid or lift an offer you are “taking” away liquidity and thus pay a fee. The rebates can very depending on what ECN is used. ( see link below ).

          Believe it or not, there are people that have been making a living over the last 10 years simply adding “liquidity” and gaining the rebate from the ECN. You can literally trade back and forth at the “spread” between the bid and ask and either try and make some money off the spread …. and/or obtaining the rebate for providing liquidity. Theoretically, a computerized algo Trader could trade all day long trading hundreds of thousands of shares with no profit from trading the stock, but a size-able gain from repeatedly providing “liquidity” and capturing the rebate… which is usually around 2/10th’s of a penny per share.

  16. fotis2 says:

    Daily 3BR 2555 would wait for stoch to turn up and close bellow 80 for another possible short so far has given 3 solid shorts.HD Kudos caught it with a single post

  17. fionamargaret says:

    Thanks Chris Kimble

    Thanks Tony.

    • valunvstr says:

      the 10 month ma only works in trending markets. Using it for buy and sell signals (I know you use other tools just sharing an observation) would have wrecked investors in decades like the 1930’s. It was already a terrible decade. Using the 10 month made it even worse with all the whipsaws.

  18. kvilia says:

    Hmm, ES needs one more push tomorrow morning to confirm uptrend – bear below 2494.

    • kvilia says:

      Better view. If 2494 is not taken out, downside target is 2290.

    • Sethu says:

      See my green chart i said clearly that it is buy in dip in 15 mts and hour time frame. It went down below 2430-2436 and the support is held . The key thing in trade is understanding the trend. Whoever shorted below 2430 should be nimble enough to cover the shorts as it is a counter trend trade. I am long and added more longs at 2430. Now i need to wait and see how it behaves around day t/f level. I will be trailing longs till then.

      • Sethu says:

        ES trading well above 2494 . 15mts S1 2466 s2 2446 One hour S 2442 day still negative resistance R 2542. All spx spot levels

  19. So the much anticipated “Special Report” on market turmoil by CNBC tonight featured a pension fund manager for State of California Educators.

    They are the 2nd largest pension fund in the nation with $220 Billion AUM.
    $113 Billion in global equity.

    These guys aren’t traders.
    They are very deliberate Elephants.

  20. lunker1 says:

    Tony, 350 posts in a little more than 24 hours. Not sure if we’re at capitulation yet

  21. stockop says:

    the worst markets in turmoil special I’ve ever seen. lot of unfamiliar faces and barely any bears. does not bode well for the market. I expect it to be a hard fade by morning. zero sense of “turmoil”. can’t believe they did one tonight.

    • Like I said earlier, that kind of stuff doesn’t “move” the market. It’s incredibly naïve to actually think that CNBC can move markets with some dumb “Special” programming.

      By the way, how long have you been “actively” trading the markets? And what has been the size of your capital base, on average, during that time?

      I’m just curious.

      • tommyboys says:

        This is not suppose to be a “market moving” event. This is – in Prechter’s words – a Socionomic observation. When sentiment gets to an extreme we observe these kinds of contrarian – late to the party – rearview discussions. Often they mark reversals…i.e. Discussing “turmoil” just as it’s ending.

        • Sorry, but youre jumping in from left field and missing the “point” of our discussion.

          We are talking CNBC here and the poster that brought this up claimed that they were being “used” by people in the “know” to move the market and that’s why the market rallied back like it did today.

          We weren’t talking about how the front cover of TIME Magazine is a contrary indicator.

          • stockop says:

            I’m in my 20s and have been “active” since mid 2015. I am wrong quite often if you stay around long enough you’ll see if you haven’t already. Zero professional experience all reading and the school of hard knocks. I’ve got access to half a mil, but in reality it is significantly lower than that because the amount of capital in any one trade is but a fraction of that.

            And for the record you keep twisting my works: “We are talking CNBC here and the poster that brought this up claimed that they were being “used” by people in the “know” to move the market and that’s why the market rallied back like it did today.” I never said that the special caused a rally. In fact I repeated this multiple times. I said the timing was suspicious after a green close when we’ve been down the entire month of December and never once got a special. And we get it on a positive day? The day Jerome gave his speech was real turmoil and not a whisper from the MSM.

            “We weren’t talking about how the front cover of TIME Magazine is a contrary indicator.” (Or Barrons). This is indeed what I am referencing with the PPT in regards to this CNBC special. I am expecting a sizable move one way or the other tomorrow and you obviously will poo-poo the significance of the CNBC, but they have a sizable following and after watching that joke of a special the uninformed will be buyers and one can then assume panic sellers in the near future. Or this was the all clear signal. Time will tell and maybe it is completely unrelated, but once again as i have repeated multiple times, I will continue to wear my tin foil hat and attribute it to the PPT.

            If we have reached bottom and I’m off I will just pyramid my single long (TDOC) and reassess the rest of my portfolio. You’re welcome for that one if you decide to do your own research.

            And in response to the Order Flow you go into detail below and go off on a tangent that isn’t related to what I am talking about. Two Sigma is a Quant fund that engages in HFT, but it is not their only trading methodology. In what world is a full breakdown of option purchases/selling not useful? HFTs are irrelevant to what I am talking about. It is complete conjecture by both of us as you have already said no one knows whats in their “black box”, but you can still develop hypothesis based on available information. In a world with asymmetrical information distribution I do not see how you can just say those with a detailed breakdown of order flow cannot profit off of it. I assume you have some background in CS, but it wouldn’t take many inputs or that complicated of an algorithm to achieve this. The stops and limits have nothing to do with the CNBC special and imo are nothing but a strawman by you to discredit the points I’m making.

            “Imagine phones ringing off the hook and the trading desk moving large volumes of stock (buying and selling) in order to FACILITATE customer orders. The trading desk winds up creating its own ORDER FLOW as though it is an Exchange.”
            Yeah and now I imagine a time when you finished with your customer orders. What now? Never was a strategy to profit off of that knowledge after having a material impact on the market? This is market data that is unavailable to retail and I fail to see how the PPT couldn’t use it to their advantage.

            • M Wags says:

              Since when has Renaissance Capital e ver played for order flow?

              They never have.

            • M Wags says:

              How does any of the above impact you and your trading?

              • stockop says:

                A) Arguing Renaissance is semantics. Please post proof that they do not pay for order flow. If they don’t you still have two sigma, GS, JPM, DB, and a ton of other big players with access to this data.
                B) it has no impact on my trading. it is a discussion about how markets work. Through this dialogue I have learned things I did not know before and I hope I have responded in kind.

    • xEVAx says:

      For the optimist, Cheers 🙂

      • fionamargaret says:

        …and here I was thinking the guy in the red speedos (4), toes curled around the board, was about to do a double pike….x

  22. phil1247 says:

    travis and schizo……….

    i just read trader joes post for this wave
    both options point down
    i said i would hold overnite but i am taking my 30 points while i still have them

    good luck

  23. Simon says:

    Have I missed the bottom now? I’m a 1-3 year investor, not a trader.

  24. @stockop….

    There is a tremendous amount of liquidity at the end of the day.

    Because this is when mutual funds, index funds, and ETF’s tend to pile in to do their rebalancing via “volume weighted average price” (VWAP) algorithms. By executing late in the session, these “passive” funds are able to more closely mimic the index they are tracking, which lessens tracking error.

    The whole attraction of volume near the close of the session tends to feed upon itself, leaving the middle of the day a liquidity “desert” if you will. And when you have more liquidity, you get bigger trades executed cheaper, which means you’ve also lowered your cost to execute.

    In fact, a report out of Credit Suisse back in 2015 cited that 17.8% of the volume took place in the last 30 minutes of the session. Compare this to 13% in 2007 and it most likely is comfortably above 20% now. Moreover, I would suggest that the final 5 minutes of a session account for over 6 or 7% of the day’s volume.

    If you actually trade individual stocks like me, you clearly observed a total lack of volume today. This is quite typical for a Holiday type week (aside from yesterday’s pension fund rebalancing). For example, my favorite company (EXAS) traded a measly 818,000 shares when it usually trades well over 2 million. In fact, it traded 200,000 shares in the last hour. That’s 25% of the entire day’s total.

    There is no “mystery” to what is going on near the close of trading. And CNBC isn’t privy to anything. The ONLY thing that they care about is ratings which attract advertisers. Hence, they have big mouths like Jim Cramer. 🙂

    • “Special Reports” during volatile periods also attract viewers which then in turn attracts high dollar advertisers. – – – I really see no “causality” or conspiracy in a CNBC “Special Report” being aired. Why this would be a catalyst towards a rally into the close is totally beyond me.

      • Besides, if you’ve watched CNBC for any period of time you will clearly notice that they love to have “Bull” vs “Bear” debates. They always try to include interviews and participants who have opposite views.

        In fact, I was once asked by Maria Bartiromo if I could take the “Bear” position during one of her shows on CNBC while I was living in CT. Let’s face it, the average investor is usually at work during the trading day. My guess, is that this 6PM “Special Report” is merely a rehash of most of the stuff that gets “aired” real-time during the trading session. There’s nothing in this “report” that is going to move a market. And all of the volume that got executed by index funds and ETF’s in the last hour of trading couldn’t care less about CNBC. 🙂

    • stockop says:

      Jim Cramer isn’t even going to be on tonight, he is on vacation. I am not oblivious to the liquidity post 3:30pm.

      For anyone interested:
      The numbers are even higher than what you estimated: “Last year, 26% of all trading activity on the NYSE’s flagship exchange took place in the last trade of the day”

      Liquidity in many individual issues was pretty poor today. Overall, exchange volume was slightly above average. I never said there was a mystery to EOD liquidity. I am pointing out in my tin foil hat that someone bigger than us is playing their cards. I.e. the PPT.

      I think we have a misunderstanding of what exactly the PPT is. My take on it is the Renaissance Capital’s of the world along with the other people in the know (customer orders) can play games with the market both to the downside and upside when they see order imbalances in the crowd that is usually wrong. And they have a wide net of connections that can help them (CNBC).

      • 1.) How can CNBC help an $84 Billion Dollar Fund like Renaissance Capital?

        2.) What are the parameters and circumstances that “someone in the know” is able to make at that time and moment of an order imbalance…. that allows them to take advantage of an imbalance?

        • stockop says:

          1.) theres a lot more than just the $84 billion Renaissance Technologies with access to customer orders. It was an example because it is the most well known quant fund out there. Buy the rumor sell the news? Or just to create fear. CNBC creates supply/demand when they do special market reports.

          2.) I wouldn’t know as I do not have access to the data. I can with 99% certainty assure you there is a formula out there that allows them to take advantage of an imbalance. “From 2001 through 2013, the fund’s worst year was a 21 percent gain, after subtracting fees. Medallion reaped a 98.2 percent gain in 2008, the year the Standard & Poor’s 500 Index lost 38.5 percent.” There are clear advantages to having the order book for the markets.

          • First off, with the mega-Billions that RCM has under management, (like most hedge-funds) there are only a few markets that they can even begin to execute in. Usually Bonds and Currencies. They also have Equity strategies, but those only make sense in extremely liquid markets and equities.

            Secondly, I’m not sure what you mean when you claim that RCM has access to “customer” orders. RCM has access to order flow of any ECN just as you or I do. And no, they don’t have a special “order book”. They have the same access that anyone else involved in the public markets has.

            Thirdly, if they are (now) utilizing strategies based in high-frequency trading (HFT) such as a firm like Virtu …. they are done so in typical “front-running” fashion having their own server at the Nasdaq in order to “scalp” pennies and tenths of pennies. It’s a low latency speed game. Their software programs wait for a large institution to come in and buy or sell a large amount of stock via several different ECN’s, they “identify” the pattern of order routing and try and “front-run” the order. – – – I’m not saying that this is their big money making strategy. I’m just offering it as an example that quant-trading in many ways has become an all-inclusive “name” for speed trading. I mention this because you insist that a player like RCM has a special “order book”.

            Again, you or I can call up Nasdaq and subscribe to their quote-feed at their “Exchange” by placing a server in their server warehouse. It’s no big deal these days. It just costs money like anything else. Moreover, such a strategy doesn’t require CNBC to “move” the market for you. What it does require are large institutions that move in and out of very liquid high volume stocks so that you can take advantage of the various latency that exists via the ECN’s and their commission structure.

            While no one is privy to Jim Simons secret “Black Box” and the strategies that it utilizes be it “reversion to the mean” or something like measuring “volatility” and “liquidity”…. his Fund has the SAME ACCESS to the public markets as you or I do.

            Quite frankly, I don’t even know how someone would even begin to take “advantage” of an order imbalance in the last 20 minutes of trading given that those “imbalances” get paired off. They are “announced” so as to attract counter-parties that are interested in taking the “other” side and adding liquidity. Once they take their position, they then have to “scalp” out of it. That obviously requires liquidity…. liquidity that is GONE once the closing bell takes place.

            After the close, obviously becomes even more risky as the markets open over in Asia and are subjected to all kinds of economic data and/or policy statements by various Central Bankers.

            And the “risk” certainly doesn’t have anything to do with CNBC doing some kind of a “Special Report”.


            PS. I believe that Medallion is closed to outside investors and is only for employees of Renaissance Capital Management. The fund charges a 5% management fee and commands a whopping 44% performance fee. I believe that it was +80% in 2008 and +39% in 2009. Between January of 1993 and April of 2005, they only had 17 monthloy losses and only 3 quarterly losses out of 49 quarters during that time.

            • stockop says:



              This data costs hundreds of millions of dollars to get access to. I have pulled up two specific examples to show you. You and I CANNOT get access to this data. We do not have the money.

              Let me give you a hypothetical scenario: The order book shows that retail traders have outsized positions in a certain option, or they are outsized long in a certain instrument, or that a majority of the buy orders on the day were done by people who are usually wrong. Oldest trick in the book is to fade those who are wrong more often than right. Now imagine if you knew in real time exactly what they were doing? If you could run limit orders and stops that are on your books? Talk about ability to time the markets. “The public buys the most at tops and the least at bottoms.” Pretty darn useful information if you have it. The Nasdaq quote feed just gives the order flow (DOM) not the level of detail these firms see.

              • Paying for order flow is nothing new. It has been going on for quite some time.

                So your use of the phrase “Order Book” has now been defined as payment for order flow. And as I have pointed out in my post, the HFT firms like Virtu are able to take advantage of these “retail” orders given that they have servers co-located on the floor of the Nasdaq in Mahway, New Jersey.

                There was a time when the Nasdaq allowed an HFT customer to “see” a “snap-shot” of a retail order for a few milliseconds… so that they could decide on whether or not to “act” on the order. This was done under the ruse of providing liquidity. It cost extra money for this “snap-shot”…. besides your usual monthly fee for co-location and all of the other telecom expenses. But that practice has since been banned by the SEC, for obvious reasons.

                I believe that you make a terribly naïve assumption that HFT firms are privy to accounts of “people who are usually wrong” or “fade those that are more wrong than right”.

                Bottom line: It’s a latency game that the HFT guys have an advantage of over the typical retail (and even institutional) order flow because of the DATA FEED that they are using. They are simply beating people to the punch because their data-feed is FASTER. They are doing this thousands of times a day for tenths of pennies!

                To claim that CNBC is helping these firms “run stops” or “fade people that are usually wrong” is preposterous.

            • Just a FWIW….

              Back in the late 90’s I had a friend that I did some T/A consulting for on an Equity Derivatives desk at Deutsche Bank. He was the #2 trader and their trading desk would execute large program trades as either an “agency” …. which is straight execution where the Broker would simply receive a commission, or as was more often the case as a “principal” in their own proprietary account.

              There were all kinds of ways that a Portfolio manager would obtain “execution”.

              Sometimes it was as simple as making a phone call and describing what was in the basket of stocks to be bought or sold….. other times it required the download of a file via email and a description of the names in the portfolio along with their characteristics…. volatility, capitalization, liquidity, beta, etc.

              More often than not, my buddy and his desk would “make a market” for a client. They would make a bid or an offer and act accordingly. The client would either agree to the “quote” that was offered and the stock was bought or sold at that quote.

              For example, a certain portfolio of large cap stocks with specific characteristics (similar to the S&P 500) was “unloaded” to his trading desk. He made a bid and the portfolio manager accepted it. Now, it becomes a game of hot potato because the trading desk it going to try and liquidate these positions for a quick flip over the next several minutes. Its one of the reasons why the S&P 500 futures contract would ALL OF A SUDDEN see a big contraction in its premium.

              Why was their a quick decline in the S&P even though the SPX had barely changed?

              It was because a trading desk had just taken a bunch of stock off the hands of a portfolio manager and they sold S&P futures to hedge what they were holding. You don’t just take down a bunch of stock and then sit there un-hedged, right?

              This went on ALL DAY LONG.

              Imagine phones ringing off the hook and the trading desk moving large volumes of stock (buying and selling) in order to FACILITATE customer orders. The trading desk winds up creating its own ORDER FLOW as though it is an Exchange.

              Sometimes there was a large asset allocation trade that took the course of several days. Other times it was as simple as someone wanting to buy a big chunk of SPY or a sector ETF like the OIH.

              My buddy had his computer set up so that when he looked at the Bid/Ask of the SPY the calculation was all 500 stocks in the SPY based on their bid price….. vs their ask price. That gave him a split-second “window” to make a market and be able to try and UNWIND what he had just bought or sold and make a few pennies for the firm.

              So you had all kinds of “program” trades going off and on top of that you had clients (like the Treasury’s of Large Cap Corporate America) who were allowing a trading desk to participate in stock-index arbitrage….. where any kind of discount or premium to Fair Value of the S&P Futures was arbitraged with stock and held until either expiration, rolled over, or liquidated when it was highly beneficial to do so.

              If the futures were trading at a big discount to the SPX, the trader on the desk would buy the futures and hit a button on his Sun Microsystem computer selling short a corresponding number of shares in the S&P 500. – – – If the futures were at a premium to fair value, he would sell the futures short and hit a button and buy the futures. This was usually done for a client’s account. Sometimes, it was done in a proprietary manner for the Broker’s account.

              Mind you… this was back in the late 90’s.

              Time for Happy Hour!

            • Valerie wapiti says:

              Hi Blue. Your posts this eve are very interesting. Question. Is it possible for an online broker such as TDA to allow a HFT customer to “see” a “snap-shot” of orders placed by its TDA traders? This may seem like a foil hat question but I can dig as deep as possible into the terms and conditions of joining TDA, ETrade, etc and can find no discussion of how, if at all trades are made transparant to select HFT customers.

  25. travis01 says:

    Doc, taking the kids out for dinner and trampoline park. Whatcha think on holding longs overnight with the craziness going on? My $, just ur opinion. Ramp up at end leads me to 2520-35 range but market hates me so …

  26. Long CRON @ $9.40 Holding 3,000 Shares

    Jan Effect has Started few biotech stocks up 80% today

    Wave 3 Up Started

  27. Trader T says:

    Hi All,
    Is there currently a negative divergence on Tony’s chart? Higher price today, but lower RSI than yesterday? If not, can someone please clarify to me what negative divergence is? Thanks in advance.

  28. Lee x says:

    You guys are playing checkers while Page and newbie are playing chess.
    And yes there is a PPT , I was racing their bids and now I’m packing a suitcase and headed to Mammoth Cave KY

  29. mcgcapital says:

    Almost the same close as yesterday.. another 100 point closing ramp. Fade it again for a trade. This isn’t healthy price action for bulls

  30. stockop says:

    so the ppt doesn’t exist? hmmm. I find the timing of this almost unbelievable. we closed green today!! wtf?

    • The timing of what exactly…. a CNBC Special Report?

      • stockop says:

        To my knowledge, this has never been done on a green finish for the day.

        • Sure looks like there is more often than not, a new low after their “special” report. 🙂

          • stockop says:

            i agree. my point which was not clearly made in my disbelief at seeing the special report announced is that I see what looks like a deliberate movement by “someone” to try and mark a bottom. Either that or they’re trying to bring in more demand to unload into. Either way the timing of this is suspicious. 3:50 announcement when we’re essentially flat on the day? yeah ok theres no ulterior motive behind the call to do that.

            • Having been trading the markets since 1980 in between my college classes as well as professionally since 1984 (14 years as a stock-index futures floor trader), I have seen an awful lot of market history.

              I have also observed a lot of change over the years in market structure as well, from the “specialist” system on the NYSE to using Sun Microsystem computers on the Kidder Peabody equity derivatives desk to launch all kinds of program and stock-index arb trades for clients and their proprietary account in the 80’s . . . and to Regulation NMS that was adopted in June of 2005 and essentially did away with the “specialist” and market-maker system… giving rise to the ECN’s that we have today.

              There is no “secret” to what begins at 3:50PM Eastern time. It is a time when program trades are executed so as to get execution and a mark-to-market before the closing bell.

              No Conspiracy Theory there.

              • PS. At the opening of the 3:50PM minute the SPX was trading +9 points at 2476.

                Over the next 5 minutes there was a “dip” down to 2464.82 (almost looks like a small “c” of an “a-b-c” correction before a final 5 minute rally straight into the bell with a close at 2488.83

              • stockop says:

                I appreciate you sharing your wisdom. I am not saying the announcement is what caused the ramp. They more than likely planned on doing the report earlier in the day before the 85pt S&P ramp in the last hour and a half. In fact, it more than likely got leaked and added some fire power to that rally although its not like the charts weren’t in sync.

                However, what I am saying is that the report looks like a concerted effort to move the markets. Today of all days after the price action of the past month? I will continue to wear my tin foil hat under the belief that the markets operate under semi-strong EMH and that there are those with more information/knowledge (i.e. the ppt) who can do things like get a CNBC markets in turmoil special when they so desire.

    • tommyboys says:

      This is bullish. Generally these CNBC reports come out at or near lows.

  31. torehund says:

    C up ongoing ?, this looks impressive. Bjørnen sover…🤗

  32. phil1247 says:

    doc Thai
    hope you didnt exit too soon
    2520 target coming up!

  33. Impressive rally back from 2:30pm.
    Guess the order imbalances weren’t all that bad.
    My diagnostics stocks came back nicely including EXAS which took out yesterday’s high. 🙂

  34. mm4398 says:

    As Dr. T said (in much more eloquent words than I’ll use), when the head of the Fed, Treasury, SEC, and CFTC meet, you’d better get the hell out of their way in the short term.

  35. lunker1 says:

    SPX 60min 3BR from 2398
    signal at 2425
    confirms at 4PM

    2:30PM ramp twice

  36. kvilia says:

    On the go today but looks like the bottom was legitimate. Hwb long traded, then shorts were broken, too.
    Will check Tony’s charts later today.

  37. johnnymagicmoney says:

    2 massive intra day reversals off the lows closing at the highs……………..I think we can pin the B tail on the bear Donkey now

  38. Dex T says:

    US auto sales to face recession; major dip expected in next 18 months: Bain & Company

    “Automobile demand will drastically come down in the US due to recession and demographic change in the next 18 months, reveals a Bain & Company report.”

    “What is even worse is researchers think this downturn in demand will be permanent because by the time the economy will start to recover, changing demographics will significantly reduced the total pool of potential car buyers.”

    • Dex T says:

      Bain is expecting a recession next year led in part by the auto industry.

      They also make the bold claim that that the auto industry has permanently peaked and will continue to decline through the 2020’s

      • tommyboys says:

        Lots of other technologies, advancements and change will easily counter as always if true. Autonomous vehicles provide an entire new mode for the auto industry and huge investment is being made there and has been for years already. Mass transit growing and electric vehicles will also play a role over the traditional auto biz. We’ll be ok.

      • Tom Fischer says:

        When I was in High School (several decades ago), it i needed shoes, jacket, or slacks, the “mall” was the place to go.
        Not now. Just go to the manufacturer website.
        UPS does all the driving, and they figure it out to the shortest miles.

        • tommyboys says:

          Ain’t it wonderful? See how technology improves lives LT? If you’re about to mention employment don’t. You know all about creative destruction right?

  39. stockop says:

    option numbers say this is not bullish. if this is not an A-B or 1-2 there are some nice potential harmonics setting up if we continue a little higher. imo OPEX is impacting the market today.

  40. Page says:

    Let it rip at close 😀

  41. gary61b says:

    ES, my 2397 call was close enough for b. at the time of pic these are the 25 largest limit orders displayed with most of the them above price. price needs to stay above 2409.

  42. Phil …. You still short?? And where are you looking to add ?? I went long below 2400 and looking for a spot to cover.

  43. Dex T says:

    Goldman Sachs says stock-market volatility is going to spike 50% in 2019 — and it’s formulated the perfect strategy to take advantage of the chaos

  44. Today was the last day for Prime brokers to clean up all the messy accounts..Enjoy up to 2536 ..there will be intense FOMO above there and target easy $ spx 2582 & possibly 2608-37 ..Cl 49.32

  45. tommyboys says:

    Why is TVIX moving way disproportionately to the VIX – anyone?

    • Page says:

      dropping like rock

    • stockop says:

      its current holdings are a majority of february Vix contracts. this means that the implied volatility in future months is higher than the front month.

      • travis01 says:

        Nice lil $12 tvix pickup at 2400 but due to lagging action I expect to see a nice whoosh in vix… shall see

        • stockop says:

          uvxy is printing money on the downside. no idea why, but calls are absurdly expensive. not a big fan of today’s action. wanted the gap to fill at $97.

      • tommyboys says:

        Good observation stockop. This likely reps a peak in TVIX thus volatility. Time will tell.

        • stockop says:

          It very well could have represented a peak. However, we missed the gap fill and did not get the high volume event that usually accompanies trend changing tops in UVXY. Also, the ridiculous premium on calls makes them not even worth playing unless you’re expecting a huge move in UVXY (which is gambling at this point). I’ve found that usually when the MMs have such a discrepancy in put and call pricing there is usually a reason for it (so people avoid buying in the correct direction) although this is not always the case.

  46. NEWBIE says:

    Big bounce to 2600+ from here then market crashes.

  47. quickrick38 says:

    Well, that was a 50% retrace of the move up in ES…’B’ wave?

  48. tommyboys says:

    Sentiment is bearish amongst timers. Don’t wanna see any rally just launch after yesterday either. This would kill the longer term bearish sentiment. Wanna see a longer term bearishness. Seeing most analysts after yesterday looking for a much longer bear and lower lows is bullish to contrarians.
    Hulbert Stock Newsletter Sentiment Index (HSNSI). This average currently stands at MINUS 15.6%, which means that the average timer is allocating about a sixth of his equity trading portfolio to going short.
    This minus 15.6% reading is one of the lowest on record. Only 4% of readings since 2000 were lower. The last time that the HSNSI was as low as it’s been this month was February 2016, which was the bottom of the correction (some say bear market) that began in May 2015.
    A similar picture is painted by the sentiment data for stock market timers who focus on the Nasdaq market in particular (as measured by the Hulbert Nasdaq Newsletter Sentiment Index, or HNNSI). They’re even more bearish than those reflected in the HSNSI; the HNNSI currently stands at minus 61.1%. Only 3% of readings since 2000 have been lower than this.

  49. lunker1 says:

    Tony’s Dow chart
    Int A 2900
    if Int C = 1.62A = 21.6K lower low with +D on the Daily

    just sayin

  50. Lee x says:

    I knew I should of took cash for my modeling work instead of stock
    Thanks a lot JCP

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