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Old 02-27-2002, 12:35 PM
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Default they broke an egg - but...

By breaking an egg, I simply mean there was one "expected" group of correlated buyers under the market, due to come in, and there was an equal-sized targeted, customized pocket of long front-runners, in anticipation of them. But this invisible pocket of "clients" didn't show up on schedule, so they broke the egg of inventories that had been built to mirror them.

As hard as the front-runners try to coordinate handoffs on the way up or down in one direction or the other - and as symmetrically and non-redundantly as they try to reflect buyers or sellers getting left behind - eventually somebody's invisible target pocket - whom they're tracking like radar - fail to come in behind them like clockwork, and they have to bail out in a vacuum with nobody to meet the other side.

This then triggers the next group of front-runners, and the next group, until the whole crystal falls out of whack, and it becomes impossible to tell which trades are lost front-runners - having lost track of their offsets - bailing and reentering, and which trades are their lost offsets suddenly showing up at some random spot.

So, the first error gets handded off, triggering new errors, and ricochets around for a while, until the market spikes to a new near-term low or high. At that outer point, external buyers or sellers are finally introduced into the system to make up for the original missing pocket, and the error is finally passed like a kidney stone. And then the coordinated reaction-and-handoff dance between atomistic front-runners can start to reassemble itself.

But I'd sit out this kidney-stone handoff, and just ride this long at least 'til lunch! I think the pocket of near-term buyers underneath the market - camouflaged as it may be - is still there.


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