Weekly Perspectives: The Race Back To All-time Highs

Weekly Market Outlook For September 16 – 20, 2019
September 15, 2019
Weekly Perspectives: All-time highs – when do we start selling-off?
September 15, 2019
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The race back to all-time highs 

The first week of September did not disappoint as we have now cracked the rangebound trading that punctuated the month of August.

In case you missed it, the shortened trading week saw the NA indices bottoming on the first trading day of the week and month followed by a bullish kicking gap up on Wednesday trapping the shorts and resulting in the short squeeze and rally to close the week.

The net result is that the SPY and QQQ are now less than 2% away from their all-time highs.

Still, September is historically a volatile month so any errant tweet or headline risk could jeopardize the current rally but in the short term, the buyers are in control. 
Be sure to pay attention to how price trades in relation to those Weekly, Monthly, and Quarterly open levels.

Watch this week’s Weekly Outlook video to see the levels we’ll be watching this coming week.

In this week’s video, we look at the technical outlook for the VXX SPY QQQ IWM DIA EEM TSX TLT GLD BTCUSD TOTAL EEM TLRY LITE GILD GOOG SNAP MH TLRY CGC CGNX EA SU XLU for the week of Weekly Market Outlook For September 9 – 13, 2019.

Crypto and the Latency Arms Race – 

Michael Lewis’ 2014 book, Flash Boys, famously painted a rather negative picture of the high-frequency trading industry and its impact on investors.

Fast forward five years and now we’re beginning to see the conversation shift to the ramifications of latency arbitrage (high-frequency trading) in the cryptocurrencies markets.  Interestingly the web paradigm of cryptocurrency exchanges doesn’t lend itself to high-frequency trading – think Amazon.com on Boxing Day vs. an IPO on the Nasdaq.

In this interesting piece that originally appeared in Institutional Crypto by CoinDesk , Max Boonen,founder and CEO of crypto trading firm B2C2makes the case that the ultimate consequence latency arbitrage is the creation of monopolies. 

The problem with latency arbitrage is that it is now mostly a battle of financial clout. As exchange technology improved to keep up with electronification, the random delays in order processing times called “jitter” have gone down to virtually zero, meaning that whoever gets to the next exchange first is guaranteed to come out ahead. At zero jitter, it is not sufficient for a liquidity provider to compete even at the level of the millisecond; even a 1 microsecond delay means that the latency arbitrageur’s gain will be the market maker’s loss. While anyone can be fast, only one person can be the fastest.

Ironically, many high-frequency traders abhor the speed game. High-frequency trading firm XTX explained in a comment to the CFTC that “the race for speed in trading has reached an inflection point where the marginal cost of gaining an edge over other market participants, now measured in microseconds and nanoseconds, is harming liquidity consumers.” The latency problem is a prisoner’s dilemma that leads to over-investment. “We would both be better off not spending millions of dollars on latency, but if you do invest and I don’t, then I lose for sure.”

Weekly Perspectives: The Race Back To All-time Highs

by editor time to read: 2 min