Everything is not what it seems

There's been quite a bit made about yesterday's 15,450 SPX put contracts bought yesterday from 11:57 a.m.-1:12 p.m. in chunks for about $200 million in options premium, of course a put is a bearish bet, the amount of stock that controls is roughly $2.9 billion and CNBC has suggested this is what spooked the market, but options are a tricky thing and blatant trades like that are not always what they seem.

I have also received reports this morning that VIX options that have been holding their premium well are seeing double digit declines in their premium this morning for the forward month and May, which is interesting, on one hand a very VISIBLE bearish options play and on the other VIX premiums dropping hard.

I would just caution not to assume too much about the options as there are dozens upon dozens of reasons someone might open a position like that which doesn't jive with what you'd assume they opened it for, it could be a totally different reason than a bearish bet. 

For instance, if you haven't seen it already, listen to what Cramer says in this video (one of the only ones I can watch and one everyone should watch) from the Street.com) about how he would use options to create a lie to create a new reality, in short they were used to give the market an impression that was not actually fact, it was manipulation.

THIS VIDEO is dated, but listen to what he says about AAPL, this was before the first I-Phone launch, you'll see how common this manipulation is.

Otherwise we had a 5th day of pump and dump, a little different theme today as ES futures were run up overnight to be dumped pre-market...

ES pumped overnight and dumped with 3C showing distribution before the dump and this was earlier this morning, on the open we have a knee jerk ramp that has confirmation so far.

30 Year Treasuries were bid as well, a Flight to Safety? The only thing is I see some distribution in them and have since yesterday, not a short in my view as of yet, but with the 30 year up and 5 year down it's forming a bear flattener.

China on their regularly scheduled policy action overnight (Tuesday and Thursday) withdrew more liquidity from the system, in fact almost twice as much as last week at $98 bn CNY vs 48 bn CNY last week using repos, so the Chinese stimulus that the market was all worked up about this week and gave us a pullback in FXP (thankfully) again seems to be a pipe-dream imagined up by the market as the PBoC has been clear in saying, "Don't expect stimulus", however the CREDIT situation is getting worse and worse there which we'll look at later, I'm just glad to be long FXP finally.

Initial Claims beat and pretty well and GDP missed for the final 4th quarter revision for 2013.

I'll have an update for you, but I'm interested in what's going on, it seems the market is being gamed and the pundits are blaming it on non-sense.

For instance, the Q's which looked horrible yesterday vs the other averages, even before the dump, now look pretty darn good as they held up (underlying trade) during the dump leaving us with a 5 min relative positive and a head fake move in place.

QQQ 5 min relative positive, much larger than before and finally on a respectable timeframe.

Gold and GDX are likely on deck today so get those on your quote screens.

I have some digging to do