Courtesy of Pam Martens
There were some interesting moves in the Chicago futures markets yesterday that might have been an effort to instill fear in traders that were short the market ahead of the release of the Fed’s minutes slated for unveiling at 2 p.m. Getting the party started early could induce panic short covering if the Fed minutes suggested a dovish approach to raising interest rates – which indeed they did.
The stock market had been down as much as 55 points around the 11 a.m. hour but began a gradual advance ahead of the release, with a surge to close up 274.8 points higher on the Dow Jones Industrial Average. Looking a bit psychotic, that move of more than 329 points peak to trough followed by just one day a loss of 273 points in the Dow.
Eric Hunsader, chart watcher and computer whiz who heads the market data firm Nanex, posted at Twitter yesterday that there were six separate 1000 contract eMini trades between 12:38 and 1:10 p.m. Then, just 22 seconds before the release of the Fed minutes, another 1000 eMinis are bought when “liquidity is non-existent,” says Hunsader.
The eMini is an electronically traded futures contract based on the Standard and Poor’s 500 index. Its contract values are one-fifth the size of the larger S&P 500 futures contract.
There are some equally fascinating charts posted this morning by Hunsader at Twitter showing unusual moves both in equities and currency markets ahead of the release of the Fed minutes.
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