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Is this price action nauseating, or what?

  #25 (permalink)

Calgary, Canada
Trading Experience: Intermediate
Platform: Multiple
Broker/Data: Multiple
Favorite Futures: Multiple
Deucalion's Avatar
Posts: 430 since Aug 2009

tigertrader View Post
This truly appears to be a structural change in the markets and not a cyclical one, I'm afraid. Current market reality is that an overwhelming share of trading activity is based on short-run price forecasts rather than fundamental research. Under these conditions, how can one expect prices to track changes in the fundamental values of the income streams to which the assets give title?

Markets have always been based on a shifting balance between information augmenting and information extracting strategies, but the HFT arms race coupled with changes in institutions and regulation seem to have shifted the balance markedly towards the latter. Unless the structure of incentives is altered to favor longer holding periods, I suspect that we shall continue to see low volume and low volatility as any market inefficiencies that exist are quickly gamed by HFTs.

Changes in the perceived volatility and an acknowledged Fed put have given rise to greater risk taking and greater asset allocations by institutional and retail investors, but it has also served to remove not only all the risk from the markets, but all the doubt as to where the market is headed. Who cares what happens in Europe, if the ECB and the Fed are ready willing and able to provide liquidity. So , the market continues to melt up ever so slowly.

@tigertrader, You are 2nd person whose opinion I read and value to have said that. I do not have a frame of reference so I hope to study more of this. Would you be willing to share why you believe this is a lasting change?

Normally, when there is artificial activity one would think, given a long enough macro basis, things would revert to mean, but you are challenging this notion. Another very capable trader I have had the fortune of knowing is saying the same thing. Not to disagree, but this is a challenging position to take

tigertrader View Post
tell that to Jaimie Dimon and J.P....ey!

No kidding, a lot of nonsense is spewed of these forums, with little or no facts. Unfortunately, it is getting worse rather than better

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