Computer-driven algorithmic program selling, manipulates your favorite MJ Stock daily

A Stock Pickers Market MARKET OUTLOOK (From BNN)

A year ago, we warned viewers that various speculative manias such as cannabis stocks, cryptocurrencies and blockchain were signs of a market top. Towards the end of 2018, we finally saw a massive sell-off in equity markets led by the U.S. The American stock market was disconnected from global markets which were already struggling and it was grossly overvalued, mainly led by a small group of tech stocks. Rising interest rates, a strong U.S. dollar and U.S. trade wars started having an impact on U.S. corporations, as 44 per cent of S&P companies derive their revenues from foreign markets that were slowing down.

The pull-back in equity prices was amplified by computer-driven algorithmic program selling, high-frequency trading, momentum strategies, quantitative models, the liquidation of several large hedge funds, and the indiscriminate selling of baskets of stocks held in ETFs triggered by panicky and leveraged retail investors as well as tax loss selling. It’s estimated that 85 per cent of trading volume had nothing to do with actual company fundamentals, a fact borne out by the equally rapid rebound in stock prices being experienced by global equity markets thus far in 2019. The “the herd effect” has only gotten bigger with the growth in automated trading and ETFs, leading to more pronounced periods of over and undervaluation.

This suggests that markets are becoming less efficient, creating better opportunities for active portfolio managers going forward. While valuations have come down to more attractive levels, given the ongoing economic and geopolitical uncertainties, equity markets are likely to remain volatile. We continue to be very selective and generally stick to defensive stocks with low exposure to cyclical or economically sensitive sectors relative to the market.