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deanz

Can the Price of an Individual Stock Be in Any Way Effected/Manipulated By......

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So what about indexes like the S&P....... if it was falling, can any amount of Buy Market Orders placed on the S&P or its equivalent, actually stop the decline, or can the decline only be stopped by individually stopping enough singular stocks/futures ?

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No, because the S&P 500 is only an index and can't actually be traded.

 

If you're talking about derivatives of the S&P though, such as futures or ETFs, then the answer is probably yes, and the idea is the same: arbitrage. That is just a theory on my part though, since I've never actually performed any kind of arb myself, and I don't know if this kind of thing happens specifically with the example that you gave. But I'm assuming that it absolutely does happen and on a large scale.

Edited by diablo272

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deanz - IMO there is so much that could possibly move/manipulate an individual stock. Some ideas that come to mind:

 

1) News - planned and unplanned

2) Company press releases

3) Abnormal option volume

4) Rumors

 

I don't think futures markets can move an individual stock directly, but there's some correlation when watching the ES and watching a stock that makes up the S&P.

 

I haven't done much with individual stocks in awhile, but I've been following with interest Tim's blog where he basically just focuses on finding stocks that have been / are trying to be manipulated. I've never traded any of his picks or ideas, but the premise behind it is interesting to me. It's an interesting niche to see these low priced stocks being flat out manipulated in many different ways by insiders.

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Fair Value, Program Trading, and the S&P Premium

Program Trading, Fair Value, Index Arbitrage Values - indexArb.com

What is Fair Value and what are Premium Execution Levels?

The media also talks about Fair Value constantly and the "premium" or "spread" and certain execution levels. What are they talking about?

 

The "premium" (PREM) or "spread" is the difference between the most active S&P 500 Stock Index Futures Contract (the spoos) minus the actual S&P 500 Stock Index (cash). That difference, which usually ranges between $5.00 to $-5.00, and slowly decays or rises as we reach the S&P 500 Futures Contract expiration, is what program trading is based on. When the PREM difference rises to a certain execution level, "buy" programs kick in. Our large institutional clients then buy the stocks in the S&P 500 Stock Index on the New York Stock Exchange and sell the S&P 500 Stock Index Futures Contract against those positions on the Chicago Mercantile Exchange. When the PREM difference drops to a certain execution level, "sell" programs kick in and our clients do the exact opposite. These transactions have extremely low risks because of the abnormal market differences in the PREM as traders capture those few points of profit before the PREM returns to normal and/or Fair Value. This type of program trading is called index arbitrage and is very common. But it usually accounts for less than 10% of all program trading activity done each day.

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I don't think futures markets can move an individual stock directly, but there's some correlation when watching the ES and watching a stock that makes up the S&P.

 

Have a read up about arbitrage as diablo272 suggested to me and then see if you still think the same way :-)

 

......Tim's blog ........

 

Whoa that link went straight to a purchase page... easy on.

 

 

.

 

Oh yeah I came across him before, he bombards you with sales emails daily if not more, and check out some of his trades that he lists on his profit page against your own charts, they are just crap entry and exits, maybe he did make money trading...... but he's a salesman now for sure....... IMO.

 

.

Edited by deanz
remembered timmy

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Have a read up about arbitrage as diablo272 suggested to me and then see if you still think the same way :-)

 

He did supply a theory that could work if you had the algo to do it I suppose. Just a theory. ;)

 

 

Whoa that link went straight to a purchase page... easy on.

 

Oh yeah I came across him before, he bombards you with sales emails daily if not more, and check out some of his trades that he lists on his profit page against your own charts, they are just crap entry and exits, maybe he did make money trading...... but he's a salesman now for sure....... IMO.

 

.

 

Sorry, that's the page I was at apparently. Typed that up late at night. As for his entries/exits, they are good and verified by Covestor. I get his alerts when new trades are placed and the trades are pretty good. I've never done much w/ the low priced stock arena, but it's very interesting to read about how these smaller issues can easily get manipulated and how to trade them.

 

Point is that depending on the stock the manipulation could be very blatant such as the recent one tim discusses or maybe there's something to that arb theory presented earlier. That is a theory and for me, that's not much to stand on. On the other hand, documented manipulation that is then halted by the SEC is an interesting read of something that actually did occur.

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