Fed chief, Janet Yellen, continues to prove she can turn a falling market back up as well as any of her predecessors. Through her mastery of linguistic acrobatics she gave the market a pass on Wednesday and then followed through with gifts for all on Thursday with a 48 point rally in the S&P . We now know just how powerful their new stock buying algorithm really is.
When they were testing it on Monday it nearly broke the VIX meter, causing it to jump in 4 point spikes every few minutes all afternoon. From the time they turned it on Wednesday, the market has rocketed up more in two days than it did in four days from the October "v" bottom and that October short squeeze has been declared the mother of all short squeezes by bulls and bears alike. Which creates a conundrum, what are we going to call this short squeeze?
Yellen may need to tone down their new algorithm just a bit though. As the market approached the final minute of trading Thursday the algorithm was pushing the SPY a little too hard and in the last minute of trading it drove the SPY up $6 all the way up to 213 / 2130 on S&P before reversing back down to the 207 area before the market closed.
There were 1,147 trades during that minute for a total of 610k shares, roughly $200 million. This was not a "bad tick". The exchanges have issued a ruling that the trades will stand. All traders chasing the short squeeze with market orders that were filled up at 213 were burned as they lost $6 on the SPY in seconds. In the Daily chart below, you can see how high the algorithm drove the SPY before they could get it under control.
Click on image to enlarge
Trade well my friends