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Dr. Kris has two degrees from MIT because one just wasn't enough. Her life goal was to figure out the universe and having done that (at least to her satisfaction), she decided to tackle something even more difficult—the stock market. Applying the scientific method along with an insatiably... More
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  • Intraday Market Notes: HFT 101 -- August 13 0 comments
    Aug 13, 2012 4:01 PM | about stocks: TVIX, UVXY

    3:15 pm ET: Okay, so the Olympics are over, Angela Merkel is back from vacation, and Mitt Romney has a running mate. With all of this happening, one would think that the market could have staged a stronger move this morning. Sure, it fell on the open (not sure why--maybe the traders' caffeine hadn't kicked in yet), but it reversed course mid-day. While the major averages were falling, so was the volatility index (VIX). This is an unusual occurrence as the VIX and the market typically run counter to each other. (The VIX is a measure of market fear and rises during times of instability and falls during times of complacency.)

    Since the major averages follow the tone of the VIX, it wasn't long before they reversed course. With an hour before the close, it appears as if they're going to test their opening highs as the VIX tests its intraday low of 14. Technically, the overall picture is looking increasingly bullish. The Dow Transport Index (DTX) has stopped its downward slide and is moving back up again while the VIX continues to drop. The VIX is teetering towards the bullish contrarian side, but it should be noted that the VIX can remain at these low levels for weeks, months, and--if history is any indication, even years. I'm throwing this in as a cautionary note for all of you who may be thinking of taking long positions in a VIX-related instrument (e.g., TVIX, UVXY, etc.).

    High Frequency Trading (HFT) 101
    Are you in the dark about what high frequency trading (HFT) is exactly? Join the club, so are most people. For a very interesting and comprehensible overview of what HFT is and how it affects your trading, please do take the five minutes or so to watch this video (courtesy Jon Najarian):

    Themes: High frequency trading Stocks: TVIX, UVXY
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