SYNOPSIS
We were decidedly back on the downside last week, especially with US stocks. The Nasdaq dropped a little over 3%, while the Dow and S&P 500 weren’t far behind. Of the six major indexes we chart weekly in terms of one-week performance and current trends, only the S&P/TSX Composite Index and the S&P/TSX Small Cap Index have positive trends right now.
Trading Activity… There was a bit more selling in the ProfiTrend Portfolio this past week. The annualized growth rate for the PTP is now at 94%, down from 108% previously. That compares with AGRs of -15% for the S&P 500 and +11% for the S&P/TSX Composite Index companies.
Topic of the Week… High Frequency Trading… Is the Market Rigged? Should You Care?
The recent publication of Michael Lewis’ new book, Flash Boys, has stimulated not only a flurry of interviews with the author and one of the central characters in the story, Brad Katsuyama, but also a “shit storm” of debate on Wall Street about high-frequency trading (HFT) and its impact on the markets.
The case that the media like to dramatize is that the average retail trader like you and me can’t match the performance of the computer-based trading that’s happening at the millisecond level. That’s because the HFT computers are plugged directly into the stock exchange computers. Does that mean we should give up and put our money under our mattresses, where at least we won’t be gouged by the banks? What do you think?
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The Flash Boys related videos that we posted last week stimulated a few questions from readers, including a request or two for our specific opinion on market rigging. This week, we’ll try to put these matters in context, away from the media hysteria.
Seasonality… We repeat Brooke Thackray’s videos for April once again, for those who skipped over them in the last two editions. Starting next week, we’ll starting setting the stage for May 2014, and what we might anticipate on the calendar then.
Video of the Week… There’s some nepotism involved in the selection of this week’s video. My brother Bob Whaley dropped by CNBC’s Mad Money show hosted by Jim Cramer last Thursday… coincidentally on the day that the Dow Jones Industrials dropped 267 points. He talks about VIX… his popular volatility index, the futility of buying the current batch of ETPs based on VIX, and what he’s working on to change that. Remarkably, Cramer was polite!
State Street Investor Confidence Index… The latest data for March are still posted. The institutional investors continue to favour risk (stocks) over safety (bonds), while being unfazed by the US attempt to create another Cold War. Apparently, those managing multi-billion dollar accounts ignore the media as much as we do!