They say time heals all wounds. But there are always scars.
We have endured a historic market phase. Giant crashes. Massive rallies. Histrionic fear and greed. Perma-bulls and perma-bears. Both eternal optimists and pessimists have been “right” at some point in time.
Perhaps I’m being old fashioned–or it’s wishful thinking–but the great swings must end if the wounds can be allowed to heal, especially considering the massive fundamental and technical damage that has been wrought on our economy and markets.
The flash-crash is shining a Kleig light on HFT and its dominance on the overall capital markets. After the founder of a HFT shop told an audience that he “had not lost money one day in four years”, the glory days are now over. They snuck up on the market and took it over. Now they must lay low or be slaughtered by the long arm of the government.
Things will move fast, but just not in as extended a fashion as before. Perhaps we can now establish a trading range and allow the healing to begin. SPX 1080-1180. DOW 10250-10750. Nasdaq 2200-2400. Any major breach on volume means a breakout or breakdown.