Avoiding the Battle With HFTs

There is no bull catalysts.  Earnings are coming up for the big tech names, but they haven't mattered for years.  It is a money pump story, and it will remain that way.

Friday was another spectacular reflex response by the BTFD crowd and HFTs.  HFTs knew retail was on the short side, due to the previous day's "scary" headlines.  HFTs pushed the market higher all day Friday and pushed, pushed, and pushed the buy side even more until the shorts cried uncle above ES 1970.  Now the shorts got pushed out and stopped out, we get the gap down, or HFT buying hangover.

The moves are nothing like they were in the boom in 2006 and 2007.  HFTs are now predatory and hunt down prey, usually the retail money and dumb money funds.  Yes, there are plenty of dumb money funds out there.  Just look at all those underperforming funds, both mutual and hedge funds, that get crushed by the S&P year after year.  They are HFT shark bait.  Daytrading is mostly a fool's game except for the elite traders.

The post ex hangover is weighing on the market this morning, even though nothing happened this weekend.  I remain tilted bearish over the next several weeks, but today, I have no opinion.  I definitely feel much more comfortable being long bonds than being long stocks.  The Treasury bid is relentless, as we burst higher on even the slightest of down days for equities.  Expecting 10 year yields to go to 2.30% if we can get S&P down to 1900 in August.