Algorithmic trading patten or HFT on the Dow 13/01/2010

Normally a grind, or steady bid/offer spread. The below batten is also relevant of the widening sell/buy spreads. High Frequency Trading (computer algorithm) is here to stay, you can't deal with it, don't trade in the markets. Or lean to adapt and wait for cues of how to make money when the system overloads and panics (like human/s) and and causes a sell dislocation order go through; knocking out institutional (major banks/pensions funds/larger brokerage firms) longs positions in the process. Eventually this will happen, much like the May 6th 2010 Flash Crash. But with wider consequences as commodity markets (reaching bubble status) crash in tandem with equities.



Remember the golden rule for an eventual (financial or otherwise) disaster: it is small coincidences that build up to an major event.

Good to watch for unusual trading pattens tail end of Jan 2011 and related news i.e environmental/climate, geopolitical, food inflation/tensions etc

Go to this link from Wired Magazine on Algorithmic trading (early article Dec 2010)

The AUD is becoming extremely overbought. (update 12) - Australian/QLD floods disaster, 2011 GDP will be stripped

Hence the selling

50MA just got knocked out. HFT's have been going crazy on sells, watch for any flash crashes

EUR slaughter due 1.30 breach (Update 1) - watch stocks for any catch up 'flash crash' selling

Europe is in trouble. If Greece get's another downgrade that would mean the the peripheral and core European countries plus EU/IMF have been unsuccessful in stabilizing European bond markets and the EUR.

That and the 'core' European countries bond markets are looking bad, please refer to Swiss Franc buying in Euro Zone bond end yr panic sell?

*note the widening divergence of the Dow and EUR in relation to correlation trades, particularly the 1.30 breach that occurred on May 6th 2010 (flash crash). When the Dow was 'ping pong' selling off the EUR, as the Dow dropped from 10,879 to 9,896