Tuesday Outlook: Manipulated Markets

July 6, 2009



A lot is being written, at least in the blogosphere, about the high frequency trading program pilfered from Goldman Sachs (GS). (The first article is here and you can follow many more at other sites.)

The questions being asked are pointed and terrific. For example, is the recent downturn in volume because Goldman’s computers were shut down for fear they were compromised?

Of greater importance to average investors is a dirty truth is revealed. Give Wall Street banksters a gaming stake (TARP) and what do they do with it? They give it to their HAL 9000 to trade the hell out of markets. Would you like a free trading stake and the computer to do it? Even though it would be self-defeating in the end, of course you would.

Okay, enough about that although it should provide plenty of interesting reading. Today markets were wishy-washy on continued shrinking volume. That brought out the “stick save” crew (perhaps HAL activated) but market internals remain weak.

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AMG Data, like Trim Tabs, keeps track of money flow to mutual funds and ETFs. You can see recent deterioration below (subscription required for more detailed information).






The McClellan Summation Index continues to show markets rolling over.































































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