Yet another marginal new high on the Wilshire 5000 today. I don’t have the CPCE numbers yet but yesterday was another extreme reading. We have become numb to these readings. Yet the extreme reading – produced solely by the computer algorithms that now dominate the total market – did not produce much of a price advance, at least not yet. It’s like pushing on a string and one can fear what will happen when a CPCE reading hits sub .35 on a down day which is where it seems to be heading.
“This is not your father’s market” and that much is true. This is entirely computer-driven and the computers that produce the gamma squeeze – calls which drive price, which drive calls, which drives price in an endless loop due to market maker reserve requirements – act like an electronic amplifier in that it only takes a little input to drive output. An old fashioned transistor circuit. The computers are flash trading at incredible speeds flipping prices to one another and once in a while a real human set of bids come in to push it one way or another and that direction is still skewed up as seen by the CPCE readings. And right now we have a lot of herd-following, call-buying day traders providing the input with the front-running market makers (Citadel) high frequency trading machines providing the amplification and the scalping of sub-pennies at incredible (fake) volumes guaranteeing millions of profits with never a day of loss. Yes the market is thoroughly rigged and fraudulent like everything else in life.
And coming in from the other side is a huge portion of “passive” buying – your weekly 401K injections, pension funds, etc. – regularly scheduled events just like getting Botox. It’s mostly done without thought and by now these injections actually have little effect on the algorithms behavior because they are so predictable. The fund managers learned that the best bet is just to buy an index fund more or less and they won’t lose their job. No “risk”, no worry. Just do what everyone else is doing. In fact, the algorithms have come to “expect” the presence of these passive investing money dumps and without them they would have to learn new patterns and that would be upsetting. The steady weekly injections of leveraged (mostly corporate) debt to be precise do not provide amplification for the algorithms and in fact are dependent on these injections just to maintain status quo of insane prices. And so it goes until it can’t go on anymore.
And yet even with all the super-leveraged bullshit – and leverage levels and margin debt are absolutely record insane – the waves still flow, still have valid counts, still point the way toward ultimate disaster. And that’s where we sit today. A new marginal high on a flat NYSE internal readings where there was slightly more down volume than up. A sign that they churn and churn and eventually if there is no more source of input, the amplification signals will start to seek input, like a stage sound check that produces screeching feedback while trying to balance the input with output.
The hedge funds (and perhaps the overlords “elite”) still keep trying to short certain “meme” stocks like GME and AMC because it has become personal to them. They absolutely hate Redditers who sit around playing video games and laughing at Wall Street bigwigs. But the Hedgies, perhaps on orders from above, are determined at all costs to win in the end no matter the leverage or margin required. It’s quite the sideshow yet AMC sits at $43 and GME at $228. It’s as if the game will not end until these two are subdued, nay crushed, because it has become personal. And no hedge fund hotshot (or Davos participant) would ever be caught dead in either one of those real life establishments. That is the Old World Order and it must be heeled and taught to obey. The New World Order does not have a GameStop or an AMC movie theatre anywhere in sight. Those places will be razed for development of cramped apartment complexes to herd the masses. You will be lucky to be allowed to own an electric Yugo.
But I digress.
A lot of noise today but just another tiny ink smudge on the hourly chart.
Internals flat on the NYSE.
