Tuesday, February 16, 2010

Traditional Monday Morning 'Mark Up' Rarely Fails Anymore

.... even when it is on a Tuesday.

As has been the case since March 2009, a wonderful spate of premarket futures buying has lifted the market.  24 hours ago S&P futures were down 0.1%.  Now we open up 0.6%.  If you repeat that sort of buying week after week, month after month - heck you can really get yourself a nice rally.

As I wrote in the weekly summary....

If I were the Plunge Protection Team I'd have saliva on my lips as all it takes is one of their patented pre market mark ups of 0.5% and the Russell 2000 and NASDAQ will be in good shape to get HAL9000 and his merry band all excited about breaking above key resistance areas.

Ah the magic of thinly traded premarket action...

Without the data in front of me, I surmise about 40% of the move from March 2009 has been in premarket.  At this point I don't see why we even bother to have a full trading day.  Just have the premarket move from 7:00 AM to 9:30 AM and then open the market at 9:30 AM and shut it down at 10:00 AM.  90% of the daily move is complete most days.  That would give the rest of us more time to contribute to American society by shopping ....

So this takes us right to resistance on the S&P 500 (keep in mind the Russell 2000 and NASDAQ are ahead of the S&P 500 as outlined yesterday).  Since not enough real buyers exist to take the market up in the normal trading day where 98% of actual buyers and sellers live, surely premarket futures will surge another day this week to get us "where we need to go" in the overnight session ;)  Just as a fully efficient banana republic stock market should work - all major moves happening where 2% of the volume exists.  Ahem.

I was actually discussing this with someone this weekend - all this premarket "mark up" activity we've had for the past year is like having a 100 meter race, and every morning starting the bulls at the 15 meter line.  So even if there is a sell off of 0.3, 0.4% during the actual daytime session you still have a flat day due to the magic of the premarket mark up.  Viva la free market.

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