The Power Behind Wall Street? A HAL 9000

A lot is being written, at least in the blogosphere about the high frequency trading program pilfered from Goldman Sachs. (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.

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.

You can’t make this stuff up sometimes. Da Boyz on Wall Street own the markets and always have, but it’s never been this over-the-top and outrageous. It’s enough to shine light on this nonsense and see it for what it is—blatant market manipulation with taxpayer money. You won’t see much in the way of investigations because the powers that be are in the hood.

Now let’s move to earnings. July will feature a steady stream to please (spun as “better than expected”) and disappoint (just ignore those please).

The week’s young and so is the month. Let’s see how it plays out.

Disclaimer: Among other issues the ETF Digest maintains positions in: MDY, IWM, QQQQ, RWX, BWX, WIP, DBC, USL, DBB, EWA, and FXI.


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