Buy the Tanking Futures Program

When trading we watch a stock’s corresponding futures or index.  For MON the stock I was trading on the Open, SPY is my corresponding index.  Generally when SPY trades higher MON should and when SPY trades lower then MON should follow.  I say generally and this was not the case at one very important moment today.

Again MON was very strong.  It was above yesterday’s resistance of 74.  74 also was a longer term resistance level.  MON was In Play due to its conference yesterday and sharp move from 70-74 into yesterday’s close.

MON was in an intraday uptrend.  It found some resistance finally at 76, and then traded down to 75.55.  At this 75.55 level there was an important battle.  The sellers won and MON headed for lower ground.  Those well versed in intraday technical analysis (ME!) expected a move to at least 75, the next intraday support level.  In the words of the Rolling Stones,”You can’t always get what you want.”

MON had cracked the important 75.55 level.  And then seemingly fortunately for the shorts, the futures and indexes started tanking.  Should I have a salad for lunch of maybe some soup?    SPY tanked.  I am gonna go with the salad.  SPY broke the AM support of 110.10.  I am gonna get the Big Salad.  SPY violated the longer term support of 110 (past resistance becomes support).  SPY quickly found 109.80.

And so what happened to our MON?  It tanked through 75 right?  Not exactly.  A buy program was turned on, which I will now name Buy the Tanking Futures Program.  75.41 stuck the bid.  What?  MON then was pushed through 76.   Just another fun program brought to you by HFTs.

Anyway that is their game.  This is the same principle as the Buy the New Low Program or Sell the New High Program.  The program takes the other side of a trade that has traditionally worked and then forces the short term traders out of their trades laughing all the way to the bank.

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MON 11-11-09

SPY 11-11-09

15 Comments on “Buy the Tanking Futures Program”

  1. why does it have to be some type of buy program. i agree that the fertilizer sector tends to follow the market however, the stock was strong the past two days on news. why couldn’t have been just a failed breakdown, for a strong stock

  2. why does it have to be some type of buy program. i agree that the fertilizer sector tends to follow the market however, the stock was strong the past two days on news. why couldn’t have been just a failed breakdown, for a strong stock

  3. The stock was broken with no buyers. And then the futures tanked. And a buy program just stuck the bid at 41c. With a failed breakdown generally you notice an absence of willing sellers. I have noticed this buy the tanking futures or sell the rising futures more of late.

  4. watching the replay of the tape on MON from that day, there weren’t too many willing sellers to continue to short through the revolving/rash bid at .41. The failed breakdown just forced all the scalpers to cover, program or no program it was a pretty decent place to flip when it snapped back to .55,

  5. watching the replay of the tape on MON from that day, there weren’t too many willing sellers to continue to short through the revolving/rash bid at .41. The failed breakdown just forced all the scalpers to cover, program or no program it was a pretty decent place to flip when it snapped back to .55,

  6. That was my black box. It’s designed to look for very strong stocks and buys at support levels. Very good risk reward play.

  7. That was my black box. It’s designed to look for very strong stocks and buys at support levels. Very good risk reward play.

  8. i’m not seein it, man.

    the stock just exhibited relative strength against the futures, which wouldn’t be unusual as it was in such a bullish move to begin with. and i don’t see any high volume on the chart of sellers when the spoos was tanking. that brief upspike in volume from the 41 level corresponds perfectly with the spoos looking like it had bottomed and was set to go higher. just looks like a classic case of relative strength to me.

  9. i’m not seein it, man.

    the stock just exhibited relative strength against the futures, which wouldn’t be unusual as it was in such a bullish move to begin with. and i don’t see any high volume on the chart of sellers when the spoos was tanking. that brief upspike in volume from the 41 level corresponds perfectly with the spoos looking like it had bottomed and was set to go higher. just looks like a classic case of relative strength to me.

  10. It was relatively strong, as we were certainly long until 55c was violated. But then it broke. There were no apparent buyers, then the futures tanked, and 41c stuck the bid out of nowhere. This is a perfect example of how reading the tape can give you a tremendous edge. Thxs for your comments.

  11. It was relatively strong, as we were certainly long until 55c was violated. But then it broke. There were no apparent buyers, then the futures tanked, and 41c stuck the bid out of nowhere. This is a perfect example of how reading the tape can give you a tremendous edge. Thxs for your comments.

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