03-Dec-2022Welcome to the Wall Street Undergroundupdate,...

03-Dec-2022

Welcome to the Wall Street Undergroundupdate,

Disclaimer: This is a research letter with myown views, and opinions and do not constitute in any financial advice orinvestment advice, neither does it contain any confidential information ordata. Utilisation of purely sentiment-based data with some “bland economists’ opinions and wall street and non-wall street institutional chatter for some added spice. Kindly read and enjoy.
.

Restriction period: This research paper wascreated for the November publication release but was restricted (Institutionaldistribution) before the quarterly rebalancing. There is always a blackout period before the quarterly rebalances. The identifications of price movements are agreed upon beginning of the rebalances and are executed throughout the quarter. And to keep the Quarterly Portfolio rebalances to near enough plans, tweaks are made slightly to keep or remove companies in the Quarterly Portfolios obviously notwithstanding individual company performance based on exceptional fundamentals.
.

To add some context to the sector pricemovements we have seen in this quarter, I would like to refresh everyone’sunderstanding of my last research paper which was written regarding the effectsof psychological price manipulation. And the Phase 1 adoption by Institutions: High Frequency Cyclic Sentiment Trading AI (HFCST machines).
.There I mentioned that Phase 1 was broken into 2 key levels (level 1 & level 2):

Level 1:

How AI trading and market making rules areapplied = Action to Reactions. Severe Actions to Repercussions. The AI’s predictions are regarded as more accurate than what a Human decision would be and are executed now in nanoseconds on either a Positive sentiment or news vs a Negative sentiment or news. This means that before a human trader has woken to a fresh pot of black coffee or other forms of caffeinated inducements the AI has started executing hundreds to thousands of orders based on sentiment, correlative deviations, pre-breaking news. Beta Testing: v1.1, v1.2, v1.3 and v1.4
.

Level 2:

Levers of adjustments. The inclusion ofhistoric investment situations based on last 20 to 30 years’ worth of data,patterns, cyclic movements, inflation, great depression, positive market moves,weather, plagues, political outlooks, gold and commodity fluctuations, to createhighly probabilistic decisions based on high frequency algorithmicmachines. How Group of traders in the market will digest news and what actions will the Trading Group take leading to an overall sentiment. Within 2 blinks of an eye the AI has ‘Flood Traded’ millions of dollars on a particular community based on ‘volatile protocols’. Beta Testing: v2.1, v2.2, v2.3 and v2.4

I mentioned Level 1 & 2 were in BetaTesting and testing always requires what? Vast ingestion of data. Originally, data was fed into systems based on a few years of historic data and some hypothetical data. But now different types of data are being introduced to these HFCST machines. The removal of hypothetical data and substituted by real life market events data segments to further enhance predictable price trading.
.

A note to the systems trading conspiracyenthusiasts. Level 1.1 Beta was being tested earlier but somehow news of “certaincommodity” being in oversupply came out by an “Investment bank”? Pure coincidence I believe.

Now, recently, Level 2 was also undergoingtesting and somehow the news from again some certain “Investment banks” ofpotential oversupply for a particular market commodity came out? Pure coincidence I believe.
.

Algorithms needs real life situations andoutcomes.
.

Again a note to the systems trading conspiracyenthusiasts. Level 2 was in Beta Testing and ‘perhaps’ switched to ‘Live interaction’ to ingest data, volatility patterns and to create flooded hidden orders. We all know what happened to the price of Nickel and how extreme it was that the LME (London Metal Exchange) halted Nickel trading. The reason provided was short covering by one of the world’s top producers. Russia is one of the biggest suppliers and sanctions threatened supply. Was the level 2 Beta testing of High Frequency Cyclic Sentiment Trading AI (HFCST machines) switched, which might have displayed an unprecedented binary outcome?

Without notification, discussion, or agreementthere was thousands of executed ‘rogue orders and executions’? The effect: a surge in the metals price and marked the biggest crisis to hit the 145-year-old exchange in decades and the suspension of Nickel was ordered creating numerous issues to market participants who were just waking up to a cup of coffee? Margin calls were activated, for a large China’s Holding group, had astronomical ‘Short positions’ on Nickel and their margin calls were activated forcing them to ‘Buy back’ trigging the decades enormous ‘Short squeeze’. Generally, Institutional Shorter’s with large positions are given warnings and the positions are vacated with minimal loss based on a ‘Shorter’s Funds agreement’. But when thousands of orders execute in nanoseconds is it the rise of the High Frequency Cyclic Sentiment Trading AI (HFCST machines)???. Executing thousands of trades within 2 blinks of an eye! Welcome to the new era of AI Trading Machines. This metal is crucial in making stainless steel and Electric vehicle batteries.
.

The point I would like to make here is theNickel price volatility situation was devastating in regard to large positionsbeing liquidated and sanctions imposed on Russia causing havoc to the supply chainused by the markets. But what would happen if during a severe winter there was a potential binary anomaly by the AI machines and triggered automatic self regardless extreme volatility in energy prices. The price of energy will rise enormously causing an emergency to government contracts and suppliers and worse who would really suffer? The ordinary individual unable to heat his/her home and in a severe winter condition that could lead to devastation. Am hopeful there will be precautions to stop this from happening … right?
.

Machines help accelerate human processes, butthey do not ‘Fully’ understand human suffering. We can build algorithms to predict but the human mind creates emotions and behaviours which have hundreds of organic layers of human DNA programming which is far superior to AI Machines.

Now Level 2 Testing is broken into 3 separatetesting levels (2.1, 2.2, 2.3. 2.4). v2.1 has undergone testing this year with live data and this quarter (hence the Portfolio rebalancing restriction), v2.2, 2.3, 2.4 are yet to come.
.

For a data example: the Dow Jones Indexmedian trend

10 years median trend = upwards and green

5 years median trend = upwards and green

2 years median trend = choppy and weighteddown and slightly green

1-year median trend = extremely choppy andRed

6 months median trend = choppy, approachingthe top of Aug 2022 price point

3 months = key approach to Aug highs andGreen

1 month = upwards and Green

1 week = extreme choppiness and unsettled

1 day = extreme choppiness and unsettled
.

Now look at the news feed… where are theyconcentrating? 1 day to 1 week. So, the trading focus is within the realm of extreme choppiness and unsettling sentiment. A creation of uncertainty and fear more like it. But the news feed are not pointing out the 5 to 10 year outlook. The idea of why wait 5 to 10 years when you can make that in a day or week. Hence hook you to manipulation and how our emotions rally and fall. Time tested antics where consistency favours probability, patience runs for the hills, and greed anchors in to create the Ferris wheel of Institutional investments. The market is designed to take wealth out of the impatient to the patient a note worthy statement of Mr. Buffet. If this is consistently fed into an AI what will the AI learn? How best to play on human emotions and keep the focus to a much shorter time period with the levers of greed and fear.
.

This concludes my paper and until the nextpiece of the Institutional Trading Machines update.

My next research paper will be on StatisticalArbitrage and the rise of the AI:
.

Now Sayona:

We had our annual meeting and it seems so longago now but there were some very strong positive points in it. GT asked great questions which this SYA forum also wanted to raise. It seems incredibly positive as the base of Sayona is being built and expanded similar to an Ice Berge order. Its hidden under plain sight and will be squared in time to come.
.

I will not comment (restriction) how a few Institutionsare executing the trades of Sayona. But can say my individual belief is that Sayona is being set up for success by the management. It depends on where you are looking and at which timeframe you are being diverted to focus on (as my points above regarding the S&P and the Dow.) Sayona has the hallmarks of something exceptional in the making. Your investments are yours based on your research and this being a public forum am voicing my individual viewpoints and by no means any investment advice or recommendations. Without saying much Mr. Buffet said the real truth ‘The Market is designed to take the wealth out of the impatient and into the hands of the patient’.
.

I believe we must experience the winter to enjoythe sunshine, ravel in it and create our dreams. I sincerely hope you enjoyed this thought-provoking research paper.

I better end this note now as I have a huge morningof rowing tomorrow early morning.

I hope you all have a great weekend and agreat next week in whatever you do.
.

Regards

OrdFinancial (MM)

Email: [email protected]