“”Makets”” Recover…In Overnight Session

by Chris

Once again we saw a big end of day sell off, on decent volume, right into the close and what’s the very next thing that happens?

A sustained buying program for the equity futures pretty much as soon as the cash market was closed.

So, just another rescue day by whomever it is that does such things.  Of course there was no news or other key information to support this move, and it should be noted it was not constrained to the US as the headlnes this morning are about a global rally.

Today there are a raft of earnings so perhaps this was all front running by insiders who knew/know better?

Maybe, but it’s a pattern we saw a lot during the late 2007 cycle when such overnight rebounds were super prevalent.

If this follows the Friday pattern, the opening price level set in the overnight “”markets”” will be roughly the price for the day.  In other words, no chance for a cash market player to take advantage of the move.  It already happened while they were asleep in the US.

For reference, here’s the chart that explains it all:

You might wonder, why would more than 100% of the “”markets”” gains come during non-market hours?

The answer, it seems, is that the low-volume, thinly traded, highly-leveraged non-market hours are the best time to play if your intentions are to move prices around.  We see this is all thinly traded markets.

You can I get to notice this in such tiny markets as gold and silver during the normal day market hours precisely because they are small enough to whang around using an ordinary amount of muscle to get the job done.

This is much harder is large liquid markets like US equities.  Hence, we see charts like the one above.

At any rate, when does the PPT (or its equivalent) come out to play?  That would be during the night, and at key moments when a bit of concentrated firepower is helpful to defend a critical level of support.

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