Dec 27, 2010 - Issue #247
Dark Pools and their effect on your trading.
CNBC could render a valuable service by educating their viewers regarding 'Dark Pools' and 'flash trades'.
Dark Pools are a service that firms, such as Knight Capital Group (KCG), Citadel, UBS, Citigroup (C), and
perhaps others, render to institutional investors by hiding the true size of their orders from the market.
Large pending orders tend to disturb the markets thus making it more difficult to execute. Market makers
will also use the presence of a known huge order to trade in front of it by 1 cent. By feeding the orders
into the market in smaller chunks, it is hoped to get better 'fills' before anyone realizes what's going on.
It's not illegal. Poker players do the same thing when they try to induce 'calls' without revealing the true
strength of their hand.
When charts indicate lack of follow through on breakouts, it could be the result of a dark pool halting the
advance or halting a decline on a breakdown.
Dark pool operators, through the use of technology, can utilize algorithms to execute 'flash trades' in 50
milliseconds to get the job done for their clients. Other traders may have no idea what they're up against.
Now you do.
Just another reason to buy Puts to protect 'long' positions and Calls to protect 'short' positions.
Countdown till 2012 elections: 97 weeks.
W. D. Gann, a keen market observer, although not an astronomer, nevertheless, was fascinated by the apparent
coincidence of important market 'pivot points' and astronomical dates. Theories exist for estimating time and
price of important market turning points but astronomical occurrences are computed with mathematical certainty.
There is no logical reason why these occurrences should coincide yet, empirically, they have.
The 'Full Moon' and 'New Moon', among others, have been cited. Therefore, one might be well advised to be aware
of their occurrence. Note: The first 5 business days of 2008 concluded on a 'New Moon' and we all know how that
worked out. Coincidence?
1/4 Tuesday - New Moon.
1/19 Wednesday - Full Moon.
During the next two weeks, the following DJ-30 components report earnings. Keep a sharp eye
out for possible price swings leading up to 'earnings day' (Subject to revision):
Dow score card for the week ending 12/23/10.
DJ-30: 11573.49 +81.58 +0.71%. The Real World (arithmetical) DJ-30: 50.97 +0.35 +0.70%.
UP: 19, Down: 11.
Trends (weekly charts): This is the subjective part.
Rising (Generally Higher Highs/Higher Lows) 15 (+1) 50%:
AA, +*BAC, CAT, CVX, +*DIS, +*GE, +*IBM, +*JPM, MSFT, PFE, PG, TRV, +*UTX, VZ, +*XOM.
Consolidating (Generally Lower Highs/Higher Lows) 12 (-2) 40%:
BA, CSCO, -*DD, -*HD, +*HPQ, JNJ, -*KFT, -*KO, +*MCD, MMM, -*MRK, -*T.
Declining (Generally Lower Highs/Lower Lows) 3 (+1) 10%:
-*AXP, -*INTC, -*WMT.
+/- denotes change of direction.
* denotes change of category.
Comments? Ideas? Feedback? Let me have it, right between the eyes! I'd love to hear from you. Just reply to this zine and tell me what you think!