Todd Harrison: The Bull's-Eye on the Back of High-Frequency Trading

By Todd Harrison  APR 03, 2014 10:11 AM

The stock market will be the judge and jury.

 


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I attempt to view the stock market one stair-step at a time when trading, and focus on what I see as opposed to how I feel.

I will share, however, that the mainstream mindset seems to be asking two questions: "When do I buy?" and "Why would I sell?"

This tends to happen toward the tag ends of a move higher.

Yes, the charts point higher, perhaps to S&P (INDEXSP:.INX) 1960, and momentum has rewarded the dip buyers time and time again -- although momentum stocks have had a change of heart, which we must respect -- so take all technical analysis with a grain of salt.

I do believe there is more to the unnatural markets than most people think, and it is feasible that HFT = subprime = dot com.  While many believe HFT is a natural evolution of free-market Darwinism, there is a camp that believes it is entirely more pernicious. 

We've said it before and we'll say it again: the stock market plumbing is all screwy, and most high-frequency trading operations -- and many investors, for that matter -- only know a straight-up tape. 

Time will tell of course, with the stock market serving as judge and jury.  We indeed live in interesting times.

Random Thoughts:


 
R.P.

Twitter: @todd_harrison

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No positions in stocks mentioned.

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at todd@minyanville.com.

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