I have never run a black box or done any kind of quantitative trading in my life. But just by seeing the market action, especially the peculiarly sharp intraday up moves on Friday, February 5, and Thursday, February 25, I can determine that their main strategy is to buy on dips and sell on rips. The black boxes are the main factors moving the market. They are loading up on the down days and unloading inventory when the market gets overbought. This serves to make the good buying opportunities more fleeting and prevents the market from getting very oversold or very overbought. On down days, the market often bottoms within the first couple of hours of gap down days, as the black boxes swallow up all the inventory they can handle, preventing the market from trending lower intraday.
The VIX is again a teenager, lower than at anytime in 2009. The retail crowd is mostly absent in this market. I still believe in order to continue the uptrend for the year, the retail crowd needs to jump into stocks, which I don't see happening anytime soon. The daytrading volatility is so poor that I have all but given up on intraday daytrading except on very volatile days. Friday seemed like a whirlwind of volatility even though that would be considered a ho-hum day a year or two ago. I am sure VIX 30+ volatility will come back, but probably not this year.
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I think black boxes must be viewed in context of the overall direction of the market. Actually black boxes are probably constantly re-figured which adds the discretionary element behind the programs. It's not like they the programs make decisions by themselves, although they can be programmed to react to certain patterns. In current slowly upward trending markets, the boxes are probably programmed to make spreads stepping in front of discretionary traders looking to make a quick scalp.
But look at when the market is runaway in one direction, such as late January. When the market was going down hard, I think the boxes are programmed to just sell the hell out of everything and protracts moves.
This is just what I gather. If you want to get away from them, trade small cap stocks. There are no bots in these for the most part. Unless it's a pump and dump. I'm sure there are bots that just look for sudden high volume and percentage moves and just scalp, protracting moves.
I don't know, artificial intelligence, it's not intelligent and has its limits and I"m sure these limits can be exploited if you observe carefully.
Looks like we're going under! I'm glad I held my shorts.
Bears should wait to claim victory in my opinion. I still see the drop as a simple A-B-C correction with 1143 to 1148 the bottom. Could the health care bill trigger a rally from that bottom? If we rally, I see 1190-ish as the next intermediate top.
I would be a buyer, not seller into weakness on Monday. That said, I think upside has been pretty well defined and it will be very tough to get over 1075 on SPX.
mkt is cooked
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