Daddy WarBucks: The Simple Truth About Today's Market RallySubmitted by Daddy WarBucks on Tue, 04/01/2008 - 21:38
Today's market rally was no big unusual event.
The last several days the markets were in a sqeeze pattern.... meaning that buyers and sellers seemed fairly equal in number. Not much up and down movement or spread. In fact this is caused by syndicate traders buying up shares as traders sell. It's called buying into the selling.
The syndicate traders (the bad guys) are quietly accumulating shares or contracts and it is apparent by low volume.
Then at 2:30 am ET today the strategy began to play out. As America slept these syndicate traders began to run the market up. This is the best time because the herd who were in short (selling) positions had orders to buy (in case the market popped-up) sitting on servers waiting to be triggered.
By the 9:30 am open, the market had already advanced significantly. As each level up is violated, more and more stop losses or buy orders are triggered causing more and more upward momentum. So this snowball effect comes into play.
This is also called "running stops".
It usually happens on bad news, which we had.
It's the way syndicate traders operate. Do the un-expected. That's the only way to take huge profits.
They got in low at the bottom, and the spooked herd pushed the market up as they rushed to lock in profits and minimize or avoid losses.
Syndiate traders are masters at creating an environment where retail and institutional traders have to make quick, fearful panic decisions.
For all those who can't wait until the economy collapses, there is still hope. Today's rally didn't fix anything.