Dave's Daily: A Market Run By Machines - TheStreet

Dave's Daily

By Dave Fry, founder and publisher of

ETF Digest

and author of the best-selling book

Create Your Own ETF Hedge Fund.

February 25, 2010

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BULLS LAUNCH HAL 9000s

Thursday was a pretty weird day.  The bad news from Jobless Claims and rumors of continued struggles within the Euro Zone led logically to heavy selling.  But, as soon as volume waned in the afternoon a series of buy programs were launched as computer algos kicked into gear.  There's no denying it since what shred of good news accounted for a bull move?  Perhaps it was just a holdover from Wednesday's news interest rates for Da Boyz will remain low--so keep your HAL 9000 fat fingering the buy button.  Shorts were easily squeezed.

Volume was heavy on the two-way action.  Breadth was flat to negative.

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Continue to Major U.S. Markets

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Continue to Major U.S. Market Sectors, Bonds & Beyond

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Continue to Currency & Commodity Markets

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Continue to Overseas & Emerging Markets

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Continue to Concluding Remarks

Any Primary Dealer for the Fed can borrow money at near zero.  This money is often routed to proprietary trading desks.  If you study recent profits from these organizations (Banks) you'll note most profits come from trading.   Armed with their HAL 9000s they can and do manipulate prices for fun and profit easily.  In fact, over 70% of trading on the NYSE is done via programs such as we witnessed Thursday.  This is why markets aren't behaving normally and there's a plea by many for the Volcker rule which would prohibit banks from aggressive trading.  That probably won't happen since these institutions own both political parties.

Friday will be the last trading day of February and there may be some window dressing efforts by those who need to dress things up before statements go out.

There's plenty of economic data to digest including GDP estimates, Chicago PMI, Consumer Sentiment and Existing Home Sales.  These will be spun any number of ways.

Let's see what happens.  You can follow our pithy comments on

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Disclaimer:  Among other issues the ETF Digest maintains positions in: UUP.

The charts and comments are only the author's view of market activity and aren't recommendations to buy or sell any security.  Market sectors and related ETFs are selected based on his opinion as to their importance in providing the viewer a comprehensive summary of market conditions for the featured period.  Chart annotations aren't predictive of any future market action rather they only demonstrate the author's opinion as to a range of possibilities going forward. More detailed information, including actionable alerts, are available to subscribers at

www.etfdigest.com

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Dave Fry is founder and publisher of

ETF Digest

, Dave's Daily blog and the best-selling book author of

Create Your Own ETF Hedge Fund, A DIY Strategy for Private Wealth Management

, published by Wiley Finance in 2008. A detailed bio is here:

Dave Fry.