Programs Have Made The Stock Market A Much Bigger Casino Than It Already Was

daytraders yesterday afternoon with sharp declines from Slim Jims at the highs

generated by the first-hour overreaction when the
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by 10:30 a.m. ET from the previous day’s close of 120.04. The gap opening was to

120.39, and there was no first-hour contra move. The SPY Slim Jim range, 121.25

– 121, developed from 10:10 a.m. until the initial breakout on the 1:30 p.m.

bar. This was the “Casino” payoff to the daytrader as the SPY traded down to

120, closing at 120.13 (see five-minute chart). The
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had the same Slim Jim setups, as did the
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between 35.13 – 34.92, which is the top end of the price range since October

2004. The SMH traded down to 34.14, closing at 34.23. The net result of the

roundtrip move yesterday was the SPX
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to execute the major index
Slim Jim
shorts yesterday because they were at

extended volatility bands. The SPY price range was 121.25 – 121 and the +2.0

volatility band was 121.40 with the 1.5 volatility band at 121.07. For the SPX,

those same bands were 1210.49 – 1207.25. If you are daytrading and not using the

volatility bands for all of the major indices, HOLDRs and individual stocks, you

are leaving major profits on the table for someone else to take. Why do that?

The Dow
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Nasdaq
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the volume ratio 60 and breadth +537, both better than the major index small

price decline which highlights the sell program effect yesterday afternoon.

Also, if you believe the first-hour move was due to Greenspan’s speech in China,

I have a cheap Brooklyn bridge for sale just for you. The most important sector

activity was the semiconductors, with the SMH -1.3% following Friday’s -0.8% and

Monday’s -0.4%. This follows the 34-day rally from 29.88 to Friday’s 35.23 high

(+17.9%). The Generals have pushed the technology seasonal and caught many hedge

fund shorts along the way. Any remaining XLE long position was stopped out

a.m., the “casino” lights are on and bright green as the S&P futures are +4.30,

Dow +38 and Nasdaq +8. This means strap yourself into your seat and be ready to