By Dave Fry, founder and publisher of
and author of the best-selling book
February 25, 2010
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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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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Dave Fry is founder and publisher of
, Dave's Daily blog and the best-selling book author of
, published by Wiley Finance in 2008. A detailed bio is here: