Guestpost from Yves Lamoureux, who was über bearish last year, but is bullish this year. Technically, he sees the current market as finishing a wave 4 down, to be followed by a blow-off wave 5 to surprising highs. It may be driven by Fed panic and QE4, if not an outright NIRP. Fundamentally, as this post discusses, he thinks trading bots are evolving towards AI trading.
The financial singularity is upon us! We think about this point in time where artificial intelligence will be capable of recursive self-improvements in the financial affairs of humans.
Machines have been allowed to trade at incredible speeds. Now they have been allowed to learn. Our understanding of market mechanisms may be altered permanently. We use the language of waves to express our viewpoint. Increasingly it is usurped by machines that have no emotions.
So we put it to you. Why would waves work if the players don’t feel a thing?
We clearly understand this point as we have developed an alternative to forecasting models based on behavioral analysis. Progressively computers destroy what was reliable patterns to trade on. We see it in action daily. Certainly wave extensions are a good example. What would turn out to be a usual length now becomes almost perpetual. Thank the machines!
Most importantly is, in this environment, the ability to adapt as fast as you can to this paradigm shift. The invasion of blockchain in finance will further the advance of A.I. Human traders will be relegated to second tier markets and eventually be banished from trading all together. We have crossed this point in time where the future of finance may just be unfathomable.
At this moment, our models have generated large buy signals on the stock market. Like late 2008, where we called the bottom, our stocks did not make new lows in March 2009.
In other words, it’s a process. Notwithstanding summer weakness, we strongly believe that our picks have seen their ultimate lows. The mother of all crashes is coming but may be years away. We spent a good deal of time in 2015 shorting everything in sight.
This year paint us bulls.