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By Irene Aldridge “The Trump effect” has captured news headlines. The unprecedented rise in the U.S. stock markets following the November 8, 2016, election has taken many investors by surprise. Some portfolio managers and commentators question how long it will last. Others proclaim it a bubble that has just hit a natural ceiling for stock prices. Still others call it a “suckers’ rally”, a stock rally with little fundamental information to back up the price movements. Even the legendary Carl Icahn himself proclaimed on December 10, 2016, that “The Trump rally in stocks may have gone too far” (http://www.businessinsider.com/carl-icahn-trump-rally-2016-12). Of course, the market has reachedRead More →

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An Analysis of Institutional Activity in October 2016 Adapted from Real-Time Risk: What Investors Should Know About FinTech, High-Frequency Trading and Flash Crashes (forthcoming, Wiley, NJ). Pre-order on Amazon.com. “Money talks, bull*%$# walks”, says a classic Wall Street proverb. The expression has a lot of merit: nothing reflects one’s beliefs more than a financial bet on the markets. The larger is the bet, the stronger is the belief. AbleMarkets research indicates that institutional money sold off when negative news affected Donald Trump in October 2016, but when Hillary Clinton’s negative news emerged later in the same month, there was very little reaction from institutional money.Read More →

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When large institutions like hedge funds and pension funds trade, their decisions make a difference to the direction of prices and volatility according to AbleMarkets.com. First, the prices rise on days when the institutions buy throughout the day. Prices fall on the same day when the institutions sell during the day. Second, following institutional buying of a particular financial instrument, volatility decreases for several days with 99% probability, according to the latest research from AbleMarkets. The latest analysis uses institutional buying and selling activity, as a percentage of total buyer- and seller-initiated trades as measured by the AbleMarkets Institutional Participation Index. The index, developed usingRead More →

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Most recent routs in the U.S. financial markets have prompted an outpouring of angst. Detractors of high-frequency trading (HFT) were particularly up in arms about the market downturn, which many of them blamed squarely on manipulation by HFT. Much of the debate about the role of HFT in the events of August 2015 crash as well as previous market crashes was largely based on speculation. This article introduces data-driven evidence about the sequence of events on August 24, 2015, a particularly bad Monday when the U.S. equity markets lost over 4% in a single day. To understand the trading dynamics that led to a precipitousRead More →

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Recent market moves left many buy-side investors puzzled and wanting for more information. Was the extreme volatility observed in the Fall of 2014 a gust of wind or a hurricane, a harbinger of further price swings to come? Our research, AbleMarkets.com, provides answers. Take an absolutely ordinary day, Monday, October 13, 2014. It was Columbus Day, a banking holiday, when stock markets are open, nevertheless. Typically, Columbus Day is a quiet trading day, with little news to move the securities prices. This day was no different: the only event listed on Bloomberg LP was a speech by Chicago Federal Reserve Bank President Charles Evans. Dr.Read More →