Boo-boo

High frequency trading has official gone mainstream. From the New York Times:

"It is the hot new thing on Wall Street, a way for a handful of traders to master the stock market, peek at investors’ orders and, critics say, even subtly manipulate share prices.
It is called high-frequency trading — and it is suddenly one of the most talked-about and mysterious forces in the markets.

Nearly everyone on Wall Street is wondering how hedge funds and large banks like Goldman Sachs are making so much money so soon after the financial system nearly collapsed. High-frequency trading is one answer."

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High Frequency Trades

It is called the Enhanced Liquidity Provider Program and its actors are computers. OR High Frequency Traders as they are called. Yesterday the three darlings were C, BAC and CIT: more than 860 million shares were traded in these names in a universe of 5000 stocks. Or 10% of the total trading volume.
How to recognize these HFT targets? It starts with an early morning move followed by a flat tradingday around a very tight range. There was a constant bid to these stocks yet anytime they wanted to lift higher, there seemed to be a constant offer just a few pennies higher. The HFT’s made a killing: in addition of the 0.1-0.2 spread they collected a 0.005/share in liquidity rebates. Sphere: Related Content

Is the bear coming back?

After a fabulous quarter, we’re entering the third of this year. Funds are buying. O yes… The more sophisticated people among us think they are dead wrong. Stock exchanges will go down this quarter. Maybe they will, maybe they won’t. It’s to early to tell. Although indices are struggling, there is no lack of propping them up if this suiting the trading strategies of the Big Boys.
But due to the fact that Program Trading (as we can see in the program trading volume reports of the NYSE – soon to be abolished, though) has dominated the action the last weeks, it is an open question how much the likes of Goldman Sachs and al. are loaded with long futures positions and if they are ready to unload them, now.
Some sectors were already dumped, will the rest follow?

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