Trading Strategies: Are We Seeing Machine-Driven Rallies?

Was the rally that led the Dow to gain 1,000 points in a single trading session led by algorithms? Martin Baccardax breaks it down.
Publish date:

Are algos to blame?

TheStreet's London Bureau Chief Martin Baccardax breaks down what he believes could have been a big cause of the market rally that saw the Dow gain 1,000 points in a single trading session. While percentage-wise, the gain doesn't even hold a candle to some of the top trading sessions, it is the first time that the Dow has ever gained over 1,000 points in a single day. 

Martin Baccardax, TheStreet's London Bureau Chief, took a look at whether or not the market rally Wednesday, Dec. 26 could be blamed on the algorithms. 

"Algorithmic and quantitative investment solutions have come under fire of late from many in the investment community, as traders bemoan outsized price moves and swings on headline word triggers," explained Real Money's Kevin Curran.

"The evolution of price discovery, where not only the algorithms -- that we all complain drive price more than anything else, along with artificial intelligence and high-frequency trading...[and] "word triggers" now drive price," Stephen "Sarge" Guilfoyle said in his column on Monday morning. "All of these later-day impacts to the way price is discovered really fall under one bundle, and have truly changed this game to the point where the market does not necessarily do what many think it might."

Guilfoyle suggested that algorithms are "perverting" the logicality of the market.

You can find more Trading Strategies below.