June 16, 2016

Algorithm machine traders distorting stock charts

I agree with Goldman Sachs, which is sounding gloomy. As I've previously written, I believe that the schism between U.S. stock prices and the real economy is growing ever wider.

From my perch, the irrational is being rationalized, with the help of machines and algos that could reverse on a dime if momentum abruptly stalls. Moreover, several of my "thin-reed" indicators (like two investors I watch who rarely get it right) are going "all-in long" this week.

I'd emphasize that the dominance of machines and algos that follow price and price alone render charts less valuable than they used to be for predicting stocks' future. Ergo, I accept the fact that I have to be more anticipatory than reactionary these days.