First, commercial positions in the S&P 500 (pit or e-mini) are meaningless because they are so heavily arbitraged. If the futures get far enough ahead of the cash the commercials sell the futures and buy the cash (usually the SPY and not the outright stocks) and they guaranty themselves a profit. It is a position that is easy to take off at expiration with little slippage but much harder to take off at other times.
There are several factors that work against the reverse of this, that is buying the futures and shorting the cash, so that is why you see the commercial numbers so stacked in one direction. The thing is, this is very common and not unusual at all.
About this guys claims about manipulation of the S&P 500 contract, some of it is true and some of it is codswallop. There is a huge trader from Gelber (house number 990) who does try and manipulate the market. He does usually start acting at the time it is stated he does. The truth of his statement though stops there.
There is no way to know with whom you are going to trade with on the e-mini beforehand most times so there is no way for this trader to know he was going to trade with himself. Even more importantly, this is a simple thing for the exchange to monitor and they do monitor it very closely. If he was trading with himself on more than a rare occasion (I've traded with myself accidentally a few times) they would fine him and then increase the fines geometrically per violation if they occur in a short enough period of time (within weeks). If the 990 guy was doing what this other guy claims he's doing his fines would get to the point at which he would then be suspended. This just isn't happening.
Another example of this guy's BS is this stuff about the video. All globex trading platforms have to have the capability of printing out the trades a trader has done over the course of a day and keep that record. My computer has records going back years. These records show with whom the trader traded. The exchange has duplicate records of this and they examine them and have computers monitoring them for violations. They don't need any "video" and a "video" could only show a shot of a trader's screen which would be less revealing then the trade-file. The 990 trader trades from an office that the writer wouldn't have access to so the video is not of his screen.
There is absolutely no information, outside of what the exchange has, of what a trader is doing in total. I can see who was on the opposite side of my trade after it happens but that is it. I have no idea of what other trades they have done. If I screw up and trade with myself then only I know it and the exchange knows it and NOBODY else.
If the writer is being truthful, and he is trading 40,000 contracts per day, then he trades for a firm called Kings Tree and clears his trades through house number 023. He would also be the guy who taught the 990 trader how to make the big money in the S&P and it sounds like he is just jealous now that the 990 guy is doing better, that he left Kings Tree and that the Kings Tree trader is no longer getting a cut of his profits. That is what I think this is all about. :-o
>>PPT From the SiliconInvestor boards:<< Can you give me a link to this post?? Mapleton, If you are reading, this is what I was talking about in reference to volatility. More program trading does not mean more volatility. It means just the opposite. ===============================================================
G'morning Joe, I don't know if you are still interested in this 'phenomenon', but if so, I've excerpted the final portion of the essay below. My bolding for emphasis.....
990N Update John Mackenzie Jun 24, 2004
The S&P Emini is being collared and moved in lock step daily by several parties through linkages in the order queue, the ongoing pattern is the same every day. the market is being controlled and those with winning hands on the short side are losing when asserting their positions. This activity is clearly draining liquidity from the market, yet support exists on the long side.
We have not seen a 2% down day in the S&P in 276 trading days, this is unparalleled.
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