Why the surge in the stock market lately?

[Wyndru]

The market is so screwed up now that information is real time and everyone is an armchair investor. It will never be predictable again, it will continue to just bounce around. Changes occur too quickly these days for anything to ever stabilize.

 

[Macamus Prime]

It's communism. It's terrorism. It's OWS.

It's everything that is blaimed for all the bad things - because these things are still going on,... yet there is growth/success.

 

[Macamus Prime]

,... and everyone is an armchair investor.

Armchair financial advisor, perhaps.

Anyone can invest.

But, it takes a real asshole with tons of hot gas to be an armchair financial advisor.

 

[darkxshade]

I've been pretty spot on getting in and out the last 2 weeks. I bought and sold and bought and sold the same batch of an ETF over that time and made a nice 10% gain. My play money was only about $3k so I've only made about $300. I sold out of it yesterday and it already looks like I'll get a chance to buy back in.

If this goes on, it'll just compound every round I get in and out. It'll be awesome if I turn this into a million though I'd need to go about 200 rounds.

 

[mshan]

"We confirmed interbank liquidity in Europe was at an all time low earlier today, and can only assume the same is true for US banks. But what is very disturbing is that this is just as true at the exchange level, where it appears the aftermath of the MF collapse is just now being felt.

What exactly was the announcement.

Unless we are completely reading it incorrectly, it is nothing short of a margin call for tens if not hundreds of billions worth of product.

Because as of close of business on November 4, today, the CME just made the maintenance margin, traditionally about 26% lower than the initial margin for specs, equal. For everything.

Which means that by close of business Monday, millions of options and futures holders will be forced to deposit billions in additional capital to the CME just so they are not found to be margin deficient, and thus receive a margin call."

http://www.zerohedge.com/news/cme-g...s-maintenance-margin-equal-initial-everything

One reader comment said: "Performance Bond, in the case of CME or clearing parties, normally just another word for acceptable collateral. I'm guessing the error is that it does not apply to all products otherwise things get "interesting" (in Chinese proverb sense) on Monday, lol" and another reader posted "This wont have a big effect. Initial margin for s+p futs is 11:1 leverage, whereas maintenance is 13:1. It will only affect the truly insanely leveraged, those between 11:1 and 13:1." And another reader linked this article:

If something like this had happened in the equity markets, chances are pretty good that the market would have traded in one direction, down. Futures markets are obviously different as there’s a buyer and a seller on each trade. It would have been impossible to determine if the legacy MF positions were slanted one way or the other even if they weren’t spread all over LaSalle Street.

While the markets may not go in a specific direction as a result of Issue 1 and Issue 2, liquidation could flood the market with no regard for prevailing price action. Forced liquidation orders are always market orders and as such could lay bare the liquidity air pockets that the very MF traders liquidating their positions prevent from happening on a day-to-day basis in every futures market. Pure irony.

http://www.agweb.com/blog/opening_print/beware_the_7th_of_november_at_least_1_billion_needed/ "

This article and reader comments I pasted above all basically gibberish to me, so personally I need to wait for some more articles and analysis to show up on web before I can even begin to understand what this really means. Thought it was interesting so decided to add it to this thread anyways.



edit: two articles saying effect shouldn't be too great: http://www.robertsinn.com/2011/11/05/margin-misunderstandings/ and http://kiddynamitesworld.com/the-cme-margin-notice-that-has-everyone-in-a-tizzy.

“Yesterday, CME Group successfully transferred MF Global customer positions to a new clearing member with part, but not all, of their funds, as approved by the bankruptcy trustee and the court. By reducing the initial margin “ratio” to 1.00, we ensure that margin calls that are issued to these transferred MF Global customers will be limited to bringing their accounts into compliance with the lower, “maintenance” margin levels. Maintenance margins are set to provide appropriate risk management coverage. Initial margins are set to provide an additional buffer against future losses in the account.”

Kinda almost like what I suggested above…. The CME wanted to make sure that transferred MF Global customer accounts were not subject to higher “initial” margin maintenance requirements when receiving margin calls at their new clearing firm – that they were not whacked with bigger margin calls. Normally, margin calls require the customer to replenish their margin level up to the “initial” margin level. This rule change lowers the “initial” level so that the customer only has to replenish their margin level up to the “maintenance” level, which is the level “set to provide appropriate risk management coverage.”

FYI: (If your tv provider includes CNBC Asia in it's lineup, you should be able to watch Asian markets open Sunday night around 9 PM EST or so to get some sort of initial take on what markets think about what Zerohedge is reporting above).

 

[JEDI]

hm.. i sense a HUGE buying opportunity on mon if margin calls. people will be having a fire sale to cover.

then sell on market bounce on Tues