This is what Is happening now. The big buyers like mutual funds (real buyers) are sitting on their hands. SAC Capital can”t or won”t buy anything (largest trader on street). They may be selling for redemptions in a light tape. This is obvious by current tape action. No volume, no bids, basically a buyers strike. If this is the best the sellers can do then good luck. I write this as a non perma anything, just a guy that knows what August can be like. Moves are embellished and seem worse than they are. Volume is lower than the already sucky levels.
The guys that are, and have been moving this market over the last month are the hedge funds. Guys with 20, 50 maybe 100 million under management. Give those guys four to ten times leverage and they are having a party. They move things. When the tape peters out, they move off and chill. They go away. Hamptons, St. Lucia. Cell phones work. They pass the baton to the newer pup traders who are there to make sure there isn’t a black swan or a flash crash.
Here is a ficticious conversation
Baby Trader…the market has been going lower since you left for Martinique.
Big Trader….what am I long right now?
Baby Trader..I don’t know, lotsa stuff.
Big Trader…Just sell it, I’ll buy it back when I get back
Little Trader…wanna average down?
Big Trader..Fuck that, I will buy it cheaper or pay up if I have to.
Baby Trader…you need anything else?
Big Trader.. I’m low on Hawaiian Tropic 6, the tiki bar is low on my fave tequila and the girl I’m with has an ass that’s tighter than a bull’s ass in fly season. Anything else.?
That’s your market……………….wish I was in Martinique.