Edgy. We all know the word intimately. Who has never been “edgy” in his or her life? You know the place where the wrong word, a loud sound, or your misplaced keys can cause you to over react. The market is edgy. Yet, the interesting thing is that it is trying hard to not over react, to not fall apart on bad news. Since Monday, the market has had ample opportunity to fall apart, and it has not. Today, for example, a floating rumor is enough to keep the market from a dark swoon.
- European indices as well as U.S. futures have moved higher on rumors of an initial agreement with Russian investors to buy Cyprus Popular Bank. This could be viewed as a first step in the resolution of the bank recapitalization plans.
Yes, the rumor is enough to not only calm investors, but to have them jump back into the market. So far today, the bulls are making a strong showing after fighting off the bears on Monday and Tuesday. Maybe the bulls will give up later today, but for now, they are holding on to that rumor tightly, even in the face of rampant pessimism.
- The overall outlook for the euro is grim with few signs of any kind of rally in near-term. This situation is impacting the European economy as whole, and has become a global calamity.
I read an interesting article in TraderPlanet’s newsletter, TraderPlanet Today (Don’t Blame High Frequency Trading For Your Losers).
http://www.traderplanet.com/articles/view/163667-don-t-blame-high-frequency-trading-for-your-losers/
Jason Leavitt does a fine job of laying out the realities of high-frequency trading (HFT) and he makes his point that if you are losing at trading, blaming HFT is not appropriate.
- I’m not going to argue that HFT is good for the market, but I am going to argue it’s not nearly as bad as you think, and if you’re not making money, it’s not because of HFT, it’s because you’re not very good. Stop making excuses.
Harsh, but sometimes we all need a bit of tough love. He is right. If you are not making money in the market, it is because you are not doing your job well. Having said this for your benefit, I will now pick a tiny bone with Mr. Leavitt because I do feel HFT is a dangerous reality in the market, a danger that should not be understated.
It is true that HFT picking off a few cents here or there, up or down, does not make or break a trader. The danger is not this. The danger is the incredibly high number of trades the algorithms can make in a second and the cascading influence that can have on a market or on the market as a whole. The exchanges now have “circuit breakers” to prevent this snowballing, but, as we have seen, they sometimes do not shut off in time or they do not break at all. HFT still carries the potential to create a total market collapse and this trading scheme should be more regulated.
As always, I am looking out there for potential trades. One place I always look is the technology realm. Things are changing fast in this world, and the stock of more than few companies is beaten down because the companies have fallen behind. I like to find those companies and take advantage of their need to alter course and pick up steam again.
- Intel Corp’s media group has been on a hiring spree as it prepares to launch an Internet television service later this year, underscoring the chipmaker’s seriousness about the new business.
- Nvidia unveiled a server product on Tuesday that allows people to work on graphics-intensive tasks by connecting through low-end computers, the chipmaker’s latest move to stake out new markets as its traditional PC market loses steam. With consumers increasingly choosing tablets and smartphones over PCs, Nvidia has been looking for places to apply its graphics chip expertise, including enterprise computing, mobile devices and hand-held game devices
FedEx is a bellwether stock. The market looks to its earnings and forecasts for a sign of where the economy is headed. Certainly, I have relied on it in the last few years as a reliable economic indicator. Today, however, I am dubious of using FedEx as a guide.
- FedEx Corp cut its full-year forecast after a worse-than-expected third-quarter profit as customers shift from air express to slower but cheaper modes of shipping.
Express shipping is the number one revenue generator for FedEx and the fact that its customers are becoming more careful with their money does not necessarily mean the global economy is slipping; it could simply mean companies are becoming more efficient in these days of tightening belts. Actually, this could be a good sign for future profits, yes?
Trade in the day; Invest in your life …
