Vampire Market: All the Action is at Night

I have been commenting about how overseas buying of US equities is driving this market, most likely as a hedge against Dollar weakness. It is hard to see this continuing as Greece goes into meltdown today and China tries to rein in its excessive stimulus. The erstwhile buyers have to tend to their home markets. Now here is an interesting confirmation from the UK's Market Oracle, sent in by a reader:

1. Robert McHugh, a famed technical analyst, 80% of the market gains occurring since March 2009 have come on just 30 Mondays. Put another way, you could have bought stocks on Friday afternoon, sold them on Monday at noon, and ignored the rest of the week and roughly mirrored the S&P 500’s blistering performance.
2. Tyler [Durden] of Zero Hedge also points out that the market actually hasn’t produced a gain since September during the 9:30-4PM trading session. Instead ALL and I mean ALL of the gains produced between that time and year-end occurred during the overnight session in the futures markets: 

Comments

[DG]

Kind of a follow-up to this concept:

http://www.zerohedge.com/article/massive-spike-sp-futures-volume-rallies-market-breaks-dollar-trend

I found this comment especially interesting:

by EB
on Wed, 01/13/2010 - 14:05
#192661

That is the most ES vol ever recorded in 1 min (229k). Closest runner up is the closing ramp job on May 29 09 for 144k, then the close on Mar 31 09 w/ 105k. With a range of 1.25 pts for that 1 min bar today, the questions are: who was selling and who new there was a seller that large there?

[cloudslicer]

Well ... you know what's going to happen. I'll try to take advantage of this trend on Monday and get killed.

:)

[DG]

Well ... you know what's going to happen. I'll try to take advantage of this trend on Monday and get killed.

It's funny because, no offense to the readers of this blog intended, but anyone with half a brain could see that this was happening (notwithstanding whether they were taking advantage of it or not), so the question then becomes how is this behavior consistent with the idea that the market exists to fool the most people most of the time?

The market isn't fooling anyone any of the time right now. Sure, some of us are trying to think about when it will end and at what price levels, but it's not as if people who constantly watch the market don't know not to be short at the end of the day Friday and to sell longs on Monday afternoon.

Over at Zero Hedge, you've got commenters who claim to have decades in the financial services industry who say that this is the most nonsensical market they've ever seen.

[Anon]

If you look back to Sept of 2008, the TARP hope rally failed at 1884 on the NQ. Until we close above the 1884 in regular hours, I'm short the NQ.

[Mamma Boom Boom]

Ok guys, can we all agree? Since we've closed the gap, if this market is not toast, it is at least terra-cotta.

[Michael]

We just missed a new closing high in the SPX by 1.30 due to that sell-off in the last 20 minutes. A typical Wednesday before expiration "push" to the upside, for sure!

[dc]

As a regular reader, DG has to be hurtin' bigtime, dontchano

[DG]

dc,

Hard to hurt when you have no positions. I must have said a half-dozen times that I haven't made a trade since early November. Even Neely's only down a couple of percent since then on the trades he's recommended.

Yes, my patience is getting stretched, but other than lost opportunities, nothing negative of a financial nature has been happening to me during this rise.

I hope you're not too disappointed, although I fail to see why it would be your concern in the first place.

[Cary Lloyd]

No man is an island, DG. dc is your brother, although it might not seem like it, and, yes, he is your keeper. Know that we all care about your trades and we all wish you well and we trust you feel the same about us. I am glad that the markets represent human growth in the long run because it is not spiritually sustaining to play zero sum gains. Think of others and be productive and invest where you see a chance to make a better future.

[Sanjay]

Yelnick Gann Theory has been working brilliantly...1150 to 1130/5 to 1179...we are on our way there.

[Golum]

The intent of described action of the MMs was to target day-traders, not allowing them to make money during the day.
The operation was a success.

[Glenn Loser Neely]

The Neely Shill alias DG wrote:

"Hard to hurt when you have no positions. I must have said a half-dozen times that I haven't made a trade since early November".

My opinion is:

DG is a a loser. Only traders that are losers do not trade for 2 months, just because the market is rising. A real trader would trade bull and bear markets.
He is obviosuly not a trader. He is just an idiot that comes to this blog to get a life.

My guess is: He should be an unemployed, a son of this recession. And if he is employed he uses his employer's time and resources to read and comment this blog. What a loser.!!

He said he was not going to post anything more here.... he is also a liar.

For him to trade he needs 10 more years to learn from his gay lover! Neely...

What a loser!

Glenn Loser Neely

[DG]

GLN,

You might want to relax.

Only traders that are losers do not trade for 2 months, just because the market is rising.

That's one person's opinion. If you look at the numbers, almost 70% of the rally from the November lows happened in the first 10 trading days. I wasn't long then and I don't like the risk/reward set-ups since then, so I'm not trading them.

I've been spending my time productively, though, so I'm happy. In fact, I've just worked out a new trade entry and management scheme that I think is very promising and the initial data look very good. I actually made my first trade in a while yesterday and I will manage it according to this scheme.

He said he was not going to post anything more here.... he is also a liar.

I modified that to I'm not going to get in stupid method debates with people who bring a whole lot of opinions and very few facts.

[Mamma Boom Boom]

Considering that the market is mildly overbought, short-term; and severely overbought long-term. Plus this: "Bullish sentiment continues to increase as measured by both the weekly II data and a Bloomberg survey. II said Bulls rose to 53.4 from 48.3, the highest since Dec ‘07 while Bears fell 1 pt to 15.9, just shy of the lowest since Apr ‘87. Bloomberg said bulls on the US market rose to the highest since ‘07." And I'm going to put my money with Neely finally being correct. He says time has run out. I favor that opinion.

[Mamma Boom Boom]

A close look at the internals, the past few days, shows a pattern of distribution.

"Aww shiznit man, distribution levels were high!"

[cloudslicer]

Japan may be in a 3rd wave up.

Take a look at the Nikkei, its a different wave form then everyone else

[Diamond Jim]

Correlation with new and full moon cycle has been very tight lately. If the market is at or close to S&P 1160 tomorrow (not very likely but who knows)a short might be a reasonable trade.

[Le Chiffre]

cloudslicer,

would that be a third wave since December, or something else? Do you have a chart?

Cheers,
Le Chiffre

[Le Chiffre]

Sanjay,

That sounds cool! Chart of your Gann projections, please ;)

Cheers,
Le Chiffre

[Hank Wernicki]

What was EWT recommendation in the Jan issue ? Shorted again ?

[cloudslicer]

"cloudslicer,

would that be a third wave since December, or something else? Do you have a chart?"

Just looking a weekly chart of the last 18 months it went sideways from May-Dec.

At a minimum you would expect a C wave up. We will find out soon. If our market put in an intermediate or long term top and the Nikkei holds up then that would be strong evidence of a bullish divergence.

We are now in year 21 for the Nikkei bear. So it is possible that they may have completed a super cycle bear.

Time will tell.

[Mamma Boom Boom]

Short term, we have a sell signal. But, we also have another gap.

Damn gaps #@#@$^&(*&^%$ eeeerrrrr!

[DG]

Damn gaps

There were gaps near the July 2006 lows that stayed open until the 2008 crash, if memory serves me correct. It's an issue, but it could turn from being a short-term issue into a long-term issue.

[twitter.com/DrBubb]

"The market isn't fooling anyone any of the time right now. Sure, some of us are trying to think about when it will end and at what price levels, but it's not as if people who constantly watch the market don't know not to be short at the end of the day Friday and to sell longs on Monday afternoon."
==
APOLOGIES if I misunderstood your comment. But you may have some problems implementing this strategy when the market is closed on Monday

[Mamma Boom Boom]

DG, I agree. It's only a rule of thumb, but does have a solid record. The only flaw that I'm aware of was in late 1982, supposedly there is a big gap-up that never got filled, but I can't find it on the charts. Of course, it's never too late.