Tuesday, May 11, 2010

A Strange New Market Era: "Barter Town"

I have been talking about this all year with some of my friends at other institutions. We just couldn't put our finger on it- the market has been acting very strange since the beginning of the year (view the archives). It seems that everything is correlated and sometime artificial. I have been trading markets for 16 year-plus now and I have never quite seen anything like this year. Most stocks have not been moving independently and many actions have been suspicious. It has not seem like "normal" price action all year. I am not alone. Many traders on the floor with many more years experience than me have been scratching their heads. It is interesting to note that it is also doing this period that Goldman did lose 1-cent on any day in Q1. I know some very smart and much more nimble traders who at least was down 1 day! I'm not going to digress.......We now find out some exchanges and trading platforms decide to pull the plug whenever they want resulting in "Ghost Trades" and new "Circuit Breakers". Kind of reminds me of 'MAD MAX: Beyond Thunderdome". You remember when MastBlaster shut down "Barter Town" and asked Tina Turner's character..."Who control's barter town?". Well....Who controls the financial markets? We know it is not the majority anymore, we know it is not Congress, not The Senate, certainly not the general public. We know it was quoted that 73% of trade volume is now run by High Frequency trading and some top brokerage firms. What ever is happening, it is true that "MasterBlaster" what ever that is- Is running the show.