I have been writing recently about the two major issues confronting traders who believe that conventional investment analysis still works when I know it doesn’t. Today, while I hesitated inserting a question market following the title to this blog, I decided to just tell it like I see it.
Soon, in a matter of minutes and the following hours, we’ll see if I am right.
From 4Q2008, which was the end of the last bear market, I believe that Humongous Bank & Broker (HB&B) and the central bankers who control them have been using automated trading algorithms to set and control market prices and use ETFs as their investor demand controlling devices.
These two factors, algorithms and ETFs, are the great destroyers of market integrity.
There is no factor for valuation in these algorithms. There is no price discovery, and if there is no price discovery, how can there be a market? What people think is a market is really just a mechanism for artificial price and demand pressures. Nothing more.
This morning in pre-market trading, the SPDR Select Sector Fund – Energy Select Sector (XLE) price is $65.55, down -0.5% from yesterday’s close and down about -13% from the December high. I now believe there will be a reversal in the bear trend, starting this morning.
If I’m correct in my belief, the 46 handle on WTI at 6:00am ET this morning is probably the final flush in the Oil market. From my observation of these algorithms, pre-market action from 8 to 9:30am ET in the Oilers ought to see a major trend reversal with bullish price action to follow.
Let’s watch.