Thursday, April 3, 2014

S&P 500 Breaks Through New Record Highs

Not that this is news because market pullbacks only last hours at this stage of the cyclical bull market rally before rising to new record highs again.

The chart below shows we have reached the terminal stage of the market's advance where real pullbacks and fear are non-existent. It is a one way freight train upward taking every last spectator on board. While the market rolled over slow and steady in 2007-2008, the coming cyclical decline will likely be far more violent during the opening act.

Based on my personal criteria for investing in an asset group....

(1) fundamentally undervalued
(2) recent price decline
(3) negative sentiment

....the chart below would be what I would draw for you if I were to illustrate the most horrifying entry point possible for an investment.

The World's Billionaires

2014 Forbes Billionaire Facts & Figures
Explore more visuals like this one on the web's largest information design community - Visually.

Wednesday, April 2, 2014

More Discussion On High Frequency Trading

If you are tired of hearing about high frequency trading this week, I'm sorry, you can disregard this post. For everyone else (I can't stop reading, listening or watching the commentary around the topic) you can soak in more HFT below. I am about half way through listening to Flash Boys and it is fantastic.

Tuesday, April 1, 2014

High Frequency Trading Conversation Goes Mainstream

There has been an explosion of discussion around high frequency trading across Main Street and Wall Street following the 60 Minutes piece and release of Michael Lewis' new book Flash Boys.

As I mentioned yesterday, I have been explaining the "skimming" and "front running" process behind high frequency trading for years. See Dark Pools: Understanding The World Of High Frequency Trading

Here was an interview earlier this afternoon with Michael Lewis:

And the biggest highlight of the day came later when the head of the BATS exchange collided with the star of Lewis' book on CNBC. The entire trading floor on the NYSE stopped for twenty minutes to watch the battle take place.

The fact that people are actually discussing this topic is great for the future of the market. However, we will see whether Katsuyama's new exchange grows large enough and fast enough to stop the the next flash crash before it arrives.

Someone else that was all over this topic years ago was Mark Cuban. For a great interview on the topic with Mr. Cuban see Mark Cuban On High Frequency Trading.

NASDAQ 1999 Vs. Today

While the NASDAQ is very overpriced today in historical terms, it is far more healthy than the peak of the mania in 1999. Remembering just how insane things were, click for larger image:

Monday, March 31, 2014

60 Minutes: How The Stock Market Is Rigged

We've been discussing high frequency trading on this site for years, but the topic is about to go mainstream with the release this week of Michael Lewis' new book "Flashboys." For more on this topic see:

How High Frequency Trading Machines Crush The Day Trader