Thursday, December 10, 2015

The Last Days of Skynet aka. Dow Jones Illusional Average

As long as volume was low and Central Bank liquidity was high, the HFT algorithms could keep this illusion running.

Now it's all going in reverse, and Ponzi schemes don't go in reverse...

The red line plots option volume / NYSE volume i.e. options relative to stock volume. 

Up until the Fed stopped printing money (last October), the tail was wagging the dog i.e. derivatives were controlling the entire stock market:

Distribution: up volume / total volume