Below is a chart of the /ES which is the S&P 500 futures contract.  It is a 15 minute chart.  I have been saying for weeks that every drop in the market is being bought up by the algos from the HFTs.  Once this pattern of behavior stops watch out below.

As you can see, after the drops big time volume comes in to stop the bleeding.  This is not done manually, it is part of the algo.  Once the pattern stops, the algos will adjust and crush.

Get used to the whipsaw effect from down days in the market as I see this continuing for the near term.

HFTs are High Frequency Traders and use mathematical algorithms as trading systems.  They are programmed.  All the traders do that use HFTs are adjusting for risk.  Some are used by hedge funds as trading vehicles while others such as Citadel are mostly used as a market maker.  Citadel is up over 350% since the crash of 2008 with most of their profit coming from the market maker perspective which is basically taking the opposite trade on orders coming through if the algorithms requirements are established.  Citadel also manages over 20 billion in assets across multiple asset classes.

It is believed that close to 90% of the market is auto traded.

Check out Podcast #5 for a discussion on HFTs with Andrew Cameron

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