Volume Discount

By MICHAEL GRAY

NYSE trading volumes were up between 20 – 25 percent for June compared to prior Junes. Is the axiom: Sell in May and go away, finished?

The short answer: No

This volume up tick is based on high-frequency trading by certain firms. Early numbers showed 2 percent of firms are employing this trading scheme, yet the trades account for almost 85 percent of trading volume on certain days.

So the individual investor may have gone away, but trading desks are using this downtick in liquidity to manipulate the markets.

Black box or quant trading, which allows firms to get in and out of stock in less than a second with a penny of two profit, combined with proprietary sniffing programs, which sees trades before they hit the exchanges, allow even larger trading profits.

Given these new ploys the generate profits for certain firms, which released record trading earnings, how much of the current run ups in the markets can be taken seriously.

If day traders become the new buy and hold participants in market because they don’t sell till three o’clock then we are in big trouble.

For more on Wall and Washington and the economy see: https://mgray12.wordpress.com

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