Mass Chaos, Confusion, and Bewilderment Among the Quants Today
Courtesy of RobotTrader
Over the last 3 days, the 19-year old gamers running the multi-billion portfolios at TIAA-CREF and CalPers have “reduced risk” by turning off the 60-min. chart and are now using 15-second and 3-minute charts only. Of course, they are all following the same meatball tick for tick: The EUR/USD. But now some of the Algos are breaking down, and the fire extinguishers are now out hosing down the various grease fires in the computers.
Trading is now becoming totally chaotic. On the one hand, you have the Forex Megadroid leveraged speculators and the Forex Gridbot gamers in the FX markets now getting whipsawed and thrown overboard trying to game the USD/YEN and the EUR/USD. Now they have tightened down the timeframes, and instead of trading 150 times a day, they are now gunning the 5-second chart and trading 1,500 times a day.
Of course, this havoc automatically sweeps over to the stock market, as the 15-min. chart of the EUR/USD and every stock in the Wilshire 5000 has the exact same trading pattern, as if their ankles were tied together in a Chain Gang.
In fact, if you drill down even further most of the commodity stocks and material stocks are trading exactly with the EUR/USD on the smallest time frames, like a 5-min. chart.
On the computer screen, they look just like this:
But now, there is a fly in the ointment, a “glitch” in the Matrix.
Gold has now separated from the pack and has launched into Outer Space, irrespective of what the Euro does, or what the S & P 500 does.
If fact, the gold stocks were acting like a bunch of washed up actresses being treated for chronic depression up until a couple of days ago.
And suddenly, they bursted out of the Rehab Clinic and started running down Lankershim Blvd. in high heels and no panties towards the nearest casting director’s office.
I mean, these stocks have just been psychotic. Virtually untradeable.
By now, every single Program Robot is wired to exclusively trade off the micro-movements of the EUR/USD. But many of those Robots were also shorting gold, and were caught offsides and now several motherboards went ablaze and torched a couple of desks. Here’s a picture of the gold and silver trading desks on the 104th floor in the 1200-story Derivatives Colossus (aka JP Morgan Chase):
Now we have to wait for more data. What is coming up next? FOMC? More unemployment news? Who knows???
Email This Post
Facebook
Twitter
LinkedIn
del.icio.us
Digg