the next CRASH was written and distributed to Birinyi Associates' clients in August of 2007. In it Mr. Birinyi questioned the rationale behind structural changes such as decimalization, ECNs, and increasingly more complex trading strategies and vehicles. As a result of the essay, Birinyi Associates arrived at the conclusion that "the markets in the first decade of the 21st century are prone to systemic failureas a result of technological innovations and utilization, rapid growth of sophisticated but not necessarily vetted instruments, and other changes in the wide world of finance...We believe the various structural reforms of the 1990s have not achieved the desired effect with regard to the individual."
We continue to wonder why nobody is PISSED. These kinds of market gyrations have not occurred since the 1930s, and as much as international financial markets have been disrupted, changes to the structure of the stock market have gone seemingly unnoticed. Specialists and the services provided by the New York Stock Exchange have been removed from the picture causing market anomalies that are detailed in the publication, but have also been highlighted here. What we have witnessed over the last two months has been the culmination of complex instruments and that the theories on which they were founded are both flawed and short sighted.
Below we highlight some of the charts depicting not weakness, but market irregularities.
Additional information has been posted on this blog over the last year, visit these posts for more:
Google's 9/30 Activity: What If OOPS Doesn't Cut It
Ruling Out Speculation in the Oil Market
Financial Sector Has Best Six Day Move EVER!
S&P 500: Yet Another Cause for Concern
The SEC Uptick Rule Change: Bad Timing for a Bad Idea
S&P 500 Calculation Error
Upticks: More Freedom, Less Security
Taking Off the Collar (and the leash)
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