SPY Games

Heard some self congrats on the NYSE Friday for……….stepping in and keeping the market afloat. Or something like that. Remember as we got reminded 5000 times by 9:30 AM, the futures were down lock limit. We were sunk! That is, until the NYSE specialists, actual human beings and not machines or a bunch of Agent Smith’s, stepped in and met all the sellers. The implication being that if it was an automated exchange, no bids would have emerged.

Let’s unbundle this.

First off, we live in a world where we have ETF’s that effectively track these very futures. And they never stopped trading. It was quite easy to see where the *real* market was trading all morning if you spent about 2 seconds hitting them up. They were modestly lower than the futures lock, but not importantly so. At least while I was watching.

Secondly, futures aren’t there to “predict” an open. The best way to view futures and ETF’s pre-market is that THEY ARE the market  So if at 8:30, the SPY is 83, and at 9:30, the SPY is 85, the market actually rallied between 8:30 and 9:30. It’s logical to assume simply that bids came in over that timeframe. presumably in individual names.

Thirdly, if in fact it was some specialist magic that saved the market, how then to explain the Nazz did almost the exact same thing and rallied right after the opening bell? Last I checked, they ARE machines. Put the charts up and they almost superimpose.
And finally, I’m not real sold on the idea that a relatively low volume low, and millisecond VIX blip is so wildly bullish. It won’t effect my trading one iota whether this was in fact A BOTTOM or not. But c’mon, there has to be some actual pain associated with someone bailing, no? Who even had a chance to sell anything of any size? Or wildly over pay for options? The bobbleheads have crowed about countless days that “could have been worse”. And this was certainly one of them. Yet what exactly has that done for us, we’re at closing lows, down huge on the year.

But that last point is neither here nor there. There will be a bottom somewhere. Someone will get lucky enough to get their booking on TV that day and will get forever credited with calling it.