Tuesday, August 2, 2011

Fishing in Darkpools?

Right now, the IWM, QQQ, SPY and DIA with the DIA and IWM being the strongest, are all starting to show signs of 1 min positive divergences.

I mentioned a shakeout being likely in the last update, however....
Looking at these small probing actions in the SPY makes me wonder if there's an algo or two fishing for stops in the Dark Pools? The Dark Pools are called that because their trades, bids/offers aren't on the books, they only show up on the daily consolidated tape. The only way to uncover what might be called an "Iceberg" such as a large order to buy or sell, is through probing actions or what is known as "pinging".

There are quite a few dark pools and it's something the SEC really ought to address.

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