When the Bus is Packed, the Bots Attack

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For everyone’s information, I try to write the OP while the markets are open, but recently, I’ve been doing it after the close. I recently installed TradingView charts and platform, and while I really like the desktop version, I need to learn how to use it properly. I have one of those big curved screens, so the charts took up too much room, and I was executing trades off my laptop, which was also a pain in the ass.

I have very basic trading principles, and one of them is that the S&P never does what most people want it to do when they want it to. Friday’s sell-off after the jobs report was another great example. I can’t say I 100% understand why, but I remember years ago the PitBull made a ton of money momentum trading. If the S&P closed weak, he’d sell the close, and if it closed strong, he’d buy it. But over time, the win-loss ratio was mostly losers. I told him 20 to 25 years ago that it didn’t work, but he still does it.

Like I said, I don’t fully understand it, but MrTopStep has another rule called "the bus is too full," and that bus was way too full late Friday when volume hit 1.73 million and 961K during Monday’s trade, which created thin to win. The CME makes billions selling data to high-frequency and algorithmic trading firms, and somehow, they’ve coded their bots to recognize when the crowd is offside and automatically move the other way, electing buy stops, which makes it easy to run buy programs.

This isn’t anything new; it’s been going on for years, but some people are slow learners. Am I surprised by the rip-and-dip price action? Not at all, it’s exactly what I expected, and I expect more of it this week as China strikes back. Xi doesn’t have a poker face like Canada and Mexico. And it doesn’t look like Putin is ending the war anytime soon either.