Dummies in the window

SOME observers might believe that wild 70-point turnaround in the last hour of trading in 2000 was down to “unwinding” of futures contracts or “window dressing.” Many small investors think that is a fairy tale.

Window dressing? Fiddlesticks.That questionable activity refers to fund managers buying well performed shares towards the end of a quarter so that their abysmal stock picks looks a little better at a cursory glance. Clearly a number of investment houses or their clients were desperate to drive the Share Price Index 200 futures contract through the floor on Friday, December 29.

At least one of the biggest sellers has claimed that the billion dollars or so of trades put through were simply executing genuine orders for customers. Let’s see.These characters were standing in taxi queues, when it simultaneously occurred to them that it would make sense to get on the mobile and dump their stock into a thin market right on the closing bell of the final trading day of the year. I do not think so.

What the ASX should be asking is: were any of those Friday dealings designed to create a false market? If the outcome was not a false market, why did the S&P200 index rocket 55 points on the first trading day this year without benefit of a lead from Wall Street? If we wait for the ASIC to get involved, we are unlikely to know the answer until next Christmas.