What happened to the S&P 500? Machines did.

Just for speculating purposes, I think that investors should consider the thesis that the market run amok, because machines kicked in to make their part in cutting losses and statistical arbitrating.

My best guess after just one night of sleep on top of one of the worst S&P daily performance in years, would be that quant machines and algo trading were responsible for a good part of it.

Additionally, there were several short volatility trades out in the open. Which makes me believe that buying vol is a good short-term trade. The market is too nervous and won’t stand still. Either up or down it will, most likely, move significantly.

Think About it.

Photo credit: Ian Lamont

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