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Geo-Political Events Have No Impact On Our Markets! Why?

December 19, 2016

Image result for terror event in berlin shopping market

Today, another killing event happened over in Germany where nine Germans lost their lives due to a terrorist…who ploughed through a crowd of shoppers at a Berlin market. This type of event used to have some impact on our index markets…say the Dow Index (which used to be a human driven market with emotions). Today, our markets are driven by machines using source codes and algorithms. Algorithms have no emotions when trading our markets and this means that human events do not affect these algorithmic markets. Nearly, all trading today is done using source codes and algorithms. This change in execution is what allows our Index Markets to go UP and UP irrespective of serious Geo-political events. Today’s Dow Index is at 19,883 and the PE is 21.65.

If you look at a chart of the Dow Index over the past six weeks you will notice that nothing affects this Index on the emotional side. Negative events which used to immediately drop this Index and increase the price of gold does not happen today. Why? The key word to understand is the ‘algorithm’. Algorithms are coded instructions which enter and exit our trading markets (independently of any human input within real-time). I can code my algorithms to act (trade) irrespective of any human emotions as coded instructions do the trading. What we have today are computer driven markets which are manipulated daily by computer trading strategies which get executed by algorithms. Few seem to comprehend this reality. Our Central Banks monitor and manipulate these markets with their trading computers.

I listen to various pundits on CNBC, Bloomberg, and Fox Business daily for some comprehension of this reality. None seem to comprehend. All assume that our markets go up due to human trading actions. They assume that earnings will go up (within their imagination) and this means stocks will go UP. These pundits have their laptop in front of them and they still can not discern what is happening. None understand that our markets are now all interconnected (globally), trading is within cyberspace, our money is a cyber digit, and that source codes and algorithms do nearly all of the trading executions. Computers run our markets and algorithms are the tool used to trade our markets (mostly). Wake-up pundits to a new marketplace driven by computers and operating within ‘cyberspace’. This has been happening for years. Where is your discernment? I am:

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