I have heard more about market manipulation recently than in years past. So what kind of cash does it take to be able to manipulate the market? For example, if I am running a HF and want to go long tomorrow, can I, with enough money, sell off small overnight and then buy big in the regular US trading hours? If someone were so inclined, can you get away with dumping futures contracts overnight to lower the market to buy in volume the next day? What kind of $$$ do you think it would it take to lower the S&P’s 20 to 30 points overnight? I thought I heard that someone dumping 400-500M worth of stock could move the Dow several hundred points, I was curious if this comment has any validity. I find it hard to believe in this day and age that days like Oct 10 and Nov 20 that these huge moves are from Joe Sixpack deciding to sell their mutual funds. Is this something that is watched by the SEC? I doubt it. I am surprised that it has occurred as often as it feels as it has without some other funds profiting by going against these movements.
way too many factors. firstly, on the 400-500M, it depends how much volume is on the opposite side of those trades, in the end after dumping 400-500M, the market could be up if there is 600M of pressure on the upside. It’s not market manipulation to sell on low volume and buy on high. The direction of volume is not known and sell into low volume and buying on high volume may very well cause people to sell due to margin calls, etc. very difficult to manipulate the market and stuff like this can be justified. they are running a risk either way so it really doesn’t disadvantage anyone. another thing you have to remember is that trading down the futures doesn’t mean that down move will be reflected in equities.
i would say most market manipulation probably happens through disinformation rather than by forcing price movements (my unsourced opinion)
^^^ That makes more sense to me. I hear about market manipulation, and I can’t see how one does it by forcing price movements without taking on a bunch of risk to compensate (one possibility is cross-product manipulation, whereby you use rules of one investment method to generate opportunities in another - such as rebalancing a large value fund to take advantage of buying or selling options. Much easier to do pump-and-dump, or short-and-distort. When I hear about hedge fund manipulations, these issues (particularly the latter) seem much more likely.
Well, I wouldn’t say that I have ever done this…but suppose that you are holding a really big position in Lean Hogs and you get quarterly incentive fees and today is the last day of the quarter and Lean Hogs haven’t moved very much all day and there isn’t very much volume and you know you might just be needing a few more of them hogs…