Fear the Computer-Driven Sell-Off Last week the stock market experienced a rapid sell-off, something most investors didn’t think could happen. However, since the Great Financial Crisis, computer algorithmic-trading programs have slowly made their mark on the stock market. Today, approximately 70% of all trades are computer controlled, with some experts indicating the total is much … Read more
One might think a -3% drop in the Chinese stock market, which is now down -30% from it’s January highs and at the lowest level since November 2014, might give U.S. investors a reason to back off their bullish bets. Despite the high correlation between the U.S and Chinese stock markets, U.S. investors eagerly continued … Read more
U.S. stocks started the day in the red, but buyers came to the rescue to push prices higher. Investors continue to believe that U.S. stocks are a safe haven and are immune to any economic downturns. While in the short-term such views can be accurate, stock prices have always fallen during every economic downturn. The … Read more
After being unable to trade over its 200-day moving average, the S&P 500 “gapped” above it at open and continued to move higher all day as the equity short-sellers were flushed out. Trading volumes, while higher than they have been, were not high enough to suggest today’s move higher was due to a large number … Read more
The major U.S. stock indices tried to fight to get back over some of their key moving averages but ultimately closed below them. Foreign stocks sold off in overnight trading as global liquidity dries up. Treasury yields were mostly flat as short-sellers were unable to drive yields any higher. The S&P 500 fought to stay … Read more
How High Will Interest Rates Go? The question I get asked the most is why interest rates are rising despite my view that they should be falling. Many analysts and stock market professionals are saying interest rates will go much higher as the secular bond bull market, which began in the early 1980’s, ends. It’s … Read more
Foreign stocks were hammered last night as they followed U.S. stocks down. The computerized trading programs, or CTAs, went from a position of “max long” on the S&P 500 to “43% long” in one week, which equates to selling $88 billion of S&P 500 futures. With corporations unable to buy stocks during the blackout period … Read more
The computers started selling. I have been warning for the past couple of years that this market has been traded mostly by computers, with some experts indicating that 90% of all trades are computer driven. Since these machines have taken over trading, we’ve never seen them sell. Until now. According to Nomura’s cross-asset quant division, … Read more
Outside of the tech-heavy Nasdaq-100, most sectors closed in the red today. Asian stocks were down big and European stocks were up slightly. The S&P 500 bounced off its February highs and managed to close just over its 50-day moving average. The Nasdaq-100 bounced off its 100-day moving average and the Russell 2000 bounced off … Read more
U.S. stocks started the day higher as Asian equities were down, led by China, where stocks were down 3.7% after the Chinese stock market has been closed for Golden Week. European stocks followed suit as the European Central Bank rejected Italy’s budget proposal. Not to be outdone, European bank stocks fell to their 18-month low. … Read more