Andy Swan � Futures Manipulation 101
Andy Swan has a provocative post up about futures manipulation.
A couple of things pop up in my mind. The big open on Thursday may have partially been a byproduct of disequilibrium between global stock markets. There have been several days in the last week or so where I think time zone issues left a bit of confusion between different markets. This, if correct, would only be a very short term thing that might be over by now.
The other question is that while I don't know that the futures market is smaller than the cash market, as implied, I would say that smaller does not have to mean less liquid.
If the contention is that would-be manipulators try to strike when most participants are still asleep, well that seems more intuitive to me.
Again I am not sure what to think, leave a comment if you have an opinion or better yet leave a comment on Andy's site.
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4 comments:
I think his first sentence says it all:
"After last week’s extremely scary and extremely real selloff, big money is trying to distribute shares without causing a panic."
Looks like his theory held up again today... I like it
http://publish.vx.roo.com/thestreet/portal/?clipId=1373_10329438&channel=Cramer+On+Demand&puc=yahoo&bt=NS&bp=MAC&bst=SF&biec=false&format=flash&bitrate=300
Should leave no doubt.
The after-hours or pre-market trading pool is much smaller than during regular hours, which was part of his point. OldVet
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