A post from MichaelCovel.com which he titles, "True"
...See our comments and graphical review of the Sell Programs below.
Rittherbusch is on to something. We monitor Program Trading in the global electronic Crude markets.
We noticed that Sell Programs kicked in with each downward breach of $140 for Light Sweet Crude.
Once the market began trending down after its last lunch up through $140 the Sell Programs picked up momentum.
As Price is a function of Suppply & Demand, the net effect of these Sell Programs was to increase the immediate supply of contracts which helped push price down.
A graphic of these Sell Programs in Crude can be seen here.
View image
Hope that you found this interesting.
...See our comments and graphical review of the Sell Programs below.
True
From Yahoo Finance an educated view:
"For the time being it's what we call corrective. ... It's a profit-taking pullback that could still be followed by fresh highs down the road," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates. Ritterbusch said Tuesday's decline may have gained added momentum when computer models used by large investment funds automatically sold oil contracts once prices fell to a pre-set threshold. "A significant part of it's technical," he said of the day's trading. "A lot of these funds don't watch supply and demand fundamentals."
Rittherbusch is on to something. We monitor Program Trading in the global electronic Crude markets.
We noticed that Sell Programs kicked in with each downward breach of $140 for Light Sweet Crude.
Once the market began trending down after its last lunch up through $140 the Sell Programs picked up momentum.
As Price is a function of Suppply & Demand, the net effect of these Sell Programs was to increase the immediate supply of contracts which helped push price down.
A graphic of these Sell Programs in Crude can be seen here.
View image
Hope that you found this interesting.
Ok, I'll bite :)
How do you tell the different between machine orders and human orders?
Hi Craig,
Two simple answers to your questions.
1. In theory, any transaction in an electronic market is a Program Trade as it was managed by one or more software programs (though this is something to ponder, it is not something that can be capitalized on).
2. We have written our software to monitor size and pattern. Program trades execute with a rhythm, particularly in the electronic futures markets. Thus, we write algorithms to detect the footprints generated by these runs.
What is really cool is that we frequently find a syncopation amongst, what we call "The Machines". Particularly in the Crude market where there is tremendous activity on both sides of the pond in Light Sweet and Brent.
In the near future we will post some screen-shots of this under the algorithmic indicator, we call, 'SynchLock'.
Hope that this answers your question.
All the best,
C