S&P 500 Futs RIGGED?!

[zigglewigler]

The sector I trade has been pulled about the last few weeks throwing my signals out, flip flop moves both ways, totally influenced by the SP 500 futs, well I found a letter that's floating around the traders at the moment.

Jun 17, 2004
Received this message from a member of my investment forum who is currently on the floor of the Chicago Mercantile Exchange:

"Only have a minute but, write more later but... The entire S&P price action in the futures is being controlled by one counter party. All the guys frickin' hate them: their CME clearing number is 990N and they clear through Gelbel trading.

That one account is solely responsible for the current level of the S&P.

They are the ones that are throwing the S&P up overnight.

Then they are the ones that are sitting on the bid all day long, supporting the market action. The S&P pits have been decimated, absolutely ruined.

There is no volatility, so all the traders have left.

Now the hot pit is the Eurodollar pit. Go figure, that used to be like watching paint dry.

All the traders I have talked to view the market as being rigged.

They keep waiting for the price action to break loose, but it never does. They are stunned by the lack of volatility. And furious. "Time after time after time 990 just sits there on the bid. Don't they ever go away. They just absorb the entire market and then push the price whereever they want it to go. 'Gee, I wonder who that counter party is.' They are all terrified of shorting, because every time they do, they get drilled. I thought it was just my systems that weren't working that well, but they are far more dispirited than I."

Intervention at its finest, your tax dollars at work, providing the ultimate tax to us all. We have watched 2000 contract market orders on the Bid at key down levels of - 50 and - 100 on those rare days when 990N decides the program trading will revert to a well defined pattern of "allowable" retracements. The Minis are being rigged in order to provide "support" for swollen price levels. They have to be for now, as without the daily rigging, "Price" would revert to its inherent "Value," a disturbing proposition to those benefitting from the financial economy's adolescent denials.

Counterparties provide an important function in any exchange, liquidity. Given the incessant "intervention" by 990N, there is very little liquidity beneath these markets to provide real support.

http://tfc-charts2.w2d.com/forum/index.cgi?noframes;read=296516

 

[donaldduke]

Well if the market is being supported by 'someone' then it makes sense to buy when this person is buying.. rather than leg it to the eurodollar pit.

 

[TWI]

That is no suprise at all. Wish I was able to see it in Eurodollar however, just got up on CME on friday and trying to play the Eurodollar spreads but not getting filled just yet seems less volatile than the LIFFE STIRS

 

[oatman]

I'm with Donald on that. you know where your "out" is

 

[TWI]

This story could actually be b/s
Have not been able to coroborate it.
Appeared first on Gold Eagle which has been full of FED intervention talk for a long time.
Alternatively could be a monster options play.

 

[oatman]

My first thought was BS. If the guys on the market don't know where the paper's coming from......

 

[bracke]

I thought that all markets were manipulated by a greater or lesser amount ,so whats new?

Maybe this bunch are just better at it than others.

If you don't like the way the game is being played take your ball away and play somewhere else.

Regards

bracke

 

[The General]

Lads,

If you reckon the lads who have worked on the pits for 10+ years don't know who it is then you're kiddin yourselves.
Also, if the story is trus then surely there is an opportunity to play the S+P / DJ futs spread ?
These boys will already have been all over this like a rash. If the story is true, then you would expect them to have to support the dow to a fair extent in order to prevent stat arbi programs coming in in size !

Is it just me or is the too obvious to post ?

Your comments appreciated.....

 

[stevet]

at what point do trading methodologies become "rigging the market"? - when there is low liquidity perhaps!

 

[growltiger]

Lads,

If you reckon the lads who have worked on the pits for 10+ years don't know who it is then you're kiddin yourselves.
Also, if the story is trus then surely there is an opportunity to play the S+P / DJ futs spread ?
These boys will already have been all over this like a rash. If the story is true, then you would expect them to have to support the dow to a fair extent in order to prevent stat arbi programs coming in in size !

Is it just me or is the too obvious to post ?

Your comments appreciated.....

Not making a general comment on market rigging (there are always large accounts running the market up and down). However, I think you will find that the Dow has been outperforming the S&P in recent weeks, and last week was up when the S&P was down. That says either that there is indeed a support program in the Dow stocks, but more successful than the alleged support for the S&P, or the manipulation is not what it is cracked up to be.

 

[TRADERguy]

Hmmmm...I think that John Mackenzie is long. Nothing but someone talking up their own position. His name is on every hit on a Google search for "CME 990N" and the following appears on one of them:

John Mackenzie
[email protected]

John Mackenzie manages private capital and hosts a gold forum/investors exchange on Yahoo! groups.

Edit- If there was a huge buyer supporting the market I would have heard about this from the analysts at my firm way before I stumbled across it on a forum.

 

[Racer]

The market is always rigged, it is a big game of chicken to the cliff face...

 

[peterpr]

Readers of this thread will be interested in an article by Nelson Hultberg at:

http://www.technicalindicatorindex.com/members/guestarticles/pdfs/Hultberg_The_PPT.pdf

It's a pretty persuasive case for the existence of what a number of contributors to "the prudent Bear.com" and "safehaven.com" refer to routinely as the "Plunge Protection Team" - that's an alleged secret Federal Government operation to ensure market liquidity (Bonds Forex equities etc) in times of crisis - by serious intervention in, among other markets - you've guessed it - S&P futures.

I'm not a close follower of the US markets myself - except in so far as they bear on day-to-day trading of UK indices and stocks (which is fair amount I guess!). I have done some serious reading of various US analysts recently though and it strikes me that there are a number of burgeoning anomalies in US markets right now which go a long way to supporting what this article describes.

 

[dc2000]

Hi Peeps and conspiracy theorists
" the markets are being manipulated " so what they always are. I see no unusual movement within the said time frame. If this 990n was buying up the market do you think for one minute that the traders would be betting against him knowing they would lose, do you think you could do something blatantly illegal on the exchange and they wouldnt question it.
More likely the more the word is spread in the public domain the more the retail traders are likely to go long and get caught out

Nothing in this posting is intended as an invitation to trade these are only my thoughts, if some men in trench coats and dark glasses come to my door I will accept that I may be wrong

 

[BBB]

What about this little rule then??...

A person shall not own or control more than 20,000 contracts net long or net short in all contract months combined. For positions involving options on Standard and Poor's 500 Stock Price Index futures, this rule is superseded by the option speculative position limit rule.

http://www.cme.com/prd/overview_SP701.html

 

[TWI]

Well, if you take no notice of the UN, environment, Geneva convention, human rights and public opinion, sure you will not be bothered by some silly rules. They can always make an exception for Dubya after all you are either with him or against him.
If you are against him then there'll be a nice sleak missile rolling off the production line with your name all over it.

 

[splasher]

And you become a veteran TW..........i'm sure there must be a better handle for it than that!

 

[BBB]

Well, if you take no notice of the UN, environment, Geneva convention, human rights and public opinion, sure you will not be bothered by some silly rules. They can always make an exception for Dubya after all you are either with him or against him.
If you are against him then there'll be a nice sleak missile rolling off the production line with your name all over it.

DOH!

Yea - you're right. I should put my brain in gear.

 

[peterpr]

What about this little rule then??...

A person shall not own or control more than 20,000 contracts net long or net short in all contract months combined.

How many "persons" needed to make this alleged PPT effective in significantly moving markets as alleged then?

 

[growltiger]

Manipulation

I was looking at this much more up close and personal yesterday. There is some very strange behaviour going on. Very large bids and offers, just off the price, are definitely being shown and withdrawn in suspicious patterns. There is also a thread of allegations that a particular large account is trading against itself in the emini to create volume at prices, and persuade the market that it is going in a certain direction. Then, either the offer gets cut by 2000 contracts, and the price whizzes up, or the bid gets cut, and it collapses, against the "shape" of the order book, and against the normal dynamics of the market. The self-trading is, of course, against the rules. In either event, the "intervention" seems to be more micro than macro (it is shaking money out of the moves, rather than trying to enforce a long-term market level).

The following post from Elite Trader looks like a pretty good first hand account (although I cannot vouch for the personal details recounted in the post, the market moves were yesterday entirely consistent with the behaviour described):

I read the excerpt on 990N. I am one of the biggest traders of the emini S&P in the world as far as contracts traded per day and I have been watching 990 manipulate the market now for seven months. The thing is I don't think your guys on the floor even know the half of it.

The reason this guy has been able to control the market is because he has been crossing orders with himself for months now to make the market appear as if it were trading in a certain direction, mostly long, and eventually gets the market to trade at certain price levels and then gets the support he needs.

This is an email I wrote someone a month ago about this looking for help...

I am actually writing you to alert you to this complete market manipulation and to see if you had any pull to get the word out to different traders and the media. I am one of the biggest S&P traders in the world as far as volume per day in that I average over 40,000 round turns per day on the screen in the emini. I tell you this because that is how I know one house is completely manipulating the market everyday because of all the trades I do with this guy. I know it sounds hard to believe that one person can control a world market but trust me that is what is occurring. He works for the firm Gelber which is house 990.

This is the basic premise for his game. He waits until the market is relatively slow, around 9:30 to 10:00 everyday, usually when the "paper trade" starts to subside then he begins a theme, mostly always long and he begins to buy. He is always looking for confirmation of his theme with what other people are doing.

When the market stops trading in his direction he then drops in a offer of 300 to 700 which he sees if anyone is interested in buying it. If there is no interest he then buys the order from himself, with the order actually trading. He does this enough times until he attracts other buyers which then hits price points and the market runs violently in his direction.

I am sure I do not have to tell you that this is completely illegal to do. He started doing this with 300 lots back in November, now he has made so much money doing it that he is up to 2000 lots. He is completely in control of the market (illegally) the majority of the time.

My firm and I have contacted the Merc on three different occasions with video proof that I recorded of my trading. It shows blatantly this guy crossing his orders thousands of times a day. The first person we talked to in compliance admitted that he saw something there when they reviewed the video of the trades I taped of him. He was mysteriously fired the next day.

We then came up with more examples for them to review and in the beginning claimed he wasn't doing it. We called them a third time, this time talking to the head of compliance and he finally admitted that they had the guy under investigation because they saw something, but in the meantime he is still allowed to trade and make millions until their "investigation" is concluded.

They obviously love the volume the guy is putting up and how it makes the emini S&P look from a standpoint of a liquid market. But if the public had knowledge of what this guy was doing I don't think they would be too impressed with the liquidity.

There is obviously some kind of cover-up. Do any of the pit traders you know have knowledge this is happening? And do you have any advice on how I can anonymously get the word out with what this guy is doing? I know you are not a true tick by tick "scalper," but this is getting to the point where it is starting to effect everyone in the marketplace.

Please let me know what you think.
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