Chart Request

Here's the current SPY daily 3C chart. Earlier this morning when first asked about it, I was surprised as the 3C line was up in a "V" like pattern and the line was nearly equal with the $108 level which I found very surprising.

Yesterday of course, our market was closed, and I have been doing a lot of reading trying to understand the effect of "Dark Pools" on indicators like 3C or really any indicator. When I fisrt saw the higher reading this morning, I thought maybe it was some move from yesterday conducted in European Dark Pools which a number of US investment banks and exchanges maintain in Europe as well as Asia, of course they would be open yesterday.

In any case, 3C daily has deteriorated significantly from that earlier look today. Whether it is Dark Pool related or not, I do not know, but the same reading was not there at the close of trade on Wednesday.

As to the question that accompanied the chart request, "Are you saying that the current (SEC man hunt) will effect how the INSTITUTION trade? 

Will the SEC man hunt CHANGE the (CURRENT ACCUM/DIST) that we have been seeing? "

With regards to Dark Pools it would be a welcome change as there is no transparancy for the little guys, and no access either. If I understand Dark Pools correctly (which I may not-technically), it would give bigger, faster signals on 3C I would think. I suspect that 3C is more efficient then other moneyflow indicators because of the reporting period of Dark Pools and the fact that 3C uses a look back mechanism that some other money flow indicators do not use. 

With regard to various forms of HFT firms, I think abolishing them would give us a clearer picture of the market as much of their activity is not menat to do anything but churn volume and jump in front of market makers, so certain types of High Frequency Trading does nothing but try to front run a market maker for the spread as well as generate returns in the form of volume rebates. They have little to offer the market in terms of price discovery.

Any of these being reigned in or abolished would give us a more transparent market with fewer games until they came up with new ones any way.

As far as funds under investigation, as an accredited investor, how would you feel about the fund you choose to handle a multi million dollar portfolio being raided by the FBI? Or even mutual funds for the rest of us? I think it would at best lead to liquidation of positions via redemptions, which in English means more supply, less demand and downward pressure on prices, at least in the near term (meaning possibly a year or more). All of the funds that have come out of the market are not just because of mistrust of markets, but think about if you were struggling with you weekly paycheck and you could boost it a bit by eliminating contributions to a 401k at least for awhile.

Why the Europeans and the SEC (including the Justice Department and the FBI), within days of each other have gone after all sorts of firms, I'm not sure. It could be to cut down on speculative and or manipulative activity, but more likely it is to try to restore confidence in the markets. At least that seems to be the common sense reasoning, but these are major friends of the political machine. There may be reasons that we do not understand yet.

I don't see any downside for 3C if these firms are abolished, only upside. They won't discontinue trading, they'd just be forced to do it in a more transparent way.