Tuesday, April 13, 2010

The "Algo Wallet Flush"

This morning we had a pattern on the 5 day 5 minute chart of the S&P Mini's, that I like to call the "Wallet Flush". We barely broke the 1186.25 S2 level to the downside on some pretty good volume. Then shot back over it in short order. I have been seeing this pattern a lot over the last week or two. Basically the quants fired up the machines at around 10 EST, went on a selling spree just long enough to shake a lot of folks out, then bought into the selling. As of this writing the minis are just above the upper falling trend line on the chart at 1192.75, one would think they would want to get it just above 1194 before the next selling spree. A lot of people seem to think they can not beat the machines, and I am not advocating betting against them, but remember the quants that program these things are people too, and as long as you are aware of what is going on, and stick to your trading discipline you can beat them.

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