Eye-popping statistics - like a single-day record 'Call option volume' (that on Thursday, not Friday's weekly Expiration) - are being ignored, in an otherwise tense, but semi-copacetic market environment; all of which is constructive in the wake of calling the prior week's 'trading low'. That activity, along with the focus on minute swings in stocks triggering moves and frequent bi-directional shifts, isn't just superficial signs of 'gambling' (such approaches are rare in what everyone for sure knows tends to be irregular or even mediocre trading in late Summer); but I think of 'algo-driven' AI trading, which lacks emotion or thought of integrating fundamentals and is just based on the charts or numeric aspects of stocks ... any stocks ... and I have nothing particular in mind saying this. Just an observation of excess reliance on what are encroaching uses of AI to override human decisions. That's problematic. |
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It's not impacting anything we'll say differently; just pointing it out; so investors (or even short-term traders) don't mistake these 'robotic' swings for change in a stock you're assessing; or rather don't view them in a 'vacuum' without any effort to ascertain if 'something really is there' worth of a look. You had drama in the big hyper-scalers and AMD, NVDA, ORCL, AMZN, META etc. etc., and they were definitely based on 'news' or concerns (MU too), whereas 'algos' in fact did respond to action, but where smoke was evident, there was fire ... then the 'fire squad' showed up to squelch the flames; and bingo: rebound. To get this right (and we did) you had to see the compelled liquidation (margin calls or similar lender-forced sales) due to 'concentration' in memory and even the companies that make machines to make fabs that make semiconductors; as of course 'Situational Awareness Fund' was at the heart of that; with the slick guys at Citadel in Miami playing that to their advantage.... it was a story worthy of Paul Harvey (radio news icon whose wife wrote the postscript that he called 'the rest of the story). And I'm glad we had that right a week or more ago; but I just want everyone to grasp the volatility that 'financial engineering' or algo-trading bolstered by AI can deliver irrespective of a stocks valuation. |
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Market X-ray: I reflected on the above earlier since I have an analyst call late on a Friday; and plans. However this is all migrating about as desired; with a little bit of lackluster tone to things from time-to-time. There is even a sense of a President that is 'boxed-in'; doesn't feel we can deliver the 'knockout punch' to Iran's regime that should take place; and perhaps we are limited in 'ammo'. I am not at a level to comment on that; but again suspect there's some truth in the idea that Washington was geared-up for a decisive 'win' in Iran (following perhaps some hubris built-up based on the fast Venezuelan accomplishment), and not set-up for a slogging tit-for-tat altercation with Iran's theocracy, even after we significantly damaged their capabilities. Now, will President Trump do a spin and sort of 'declare victory' and go home? Not exactly; but partially is a possibility based on the pressures from 'others' in the Gulf and now the new security pact between Turkey, Pakistan (a nuclear country) and the Saudis. I don't particularly like that deal; as it might undermine chances of Gulf states joining the Abraham Accords, but we'll just have to see how it pans out. What is clear (unless this is all stalling for time while we rebuild our munition stocks) is that there is fatigue with the situation; and desire to sort it before Elections. Bottom-line: continuation pattern for the market and I'll have more next week. We'll see if there's any movement regarding the Persian Gulf and I don't trust (or see real depth) in the three-way Saudi/Pakistan/Turkey deal. S&P is actually not extended as I mentioned the other day; and we'll see. It is a news sensitive market; but for now the bulls remain in charge. |
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