The Mythical Market

One of the reasons for the paralysis of the market in this narrow range is probably that the role of human investors is gradually disappearing; they are being replaced with computers making automated trades to attempt to scalp out small profits frequently. The followng chart shows reportable program trading – it does not include the myriad of smaller-scale automated trading platforms in use at hedge funds and even by individuals.

Source:Prudent Bear Fund

One suspects that this behavior is helping to exaggerate the divergence in the markets between the underlying realities and the apparent calm. Certainly it is reducing volatility – but is this healthy? One suspects not.

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