In our last blog post, Benefits of a rules - based
trading system, we said the following: «On May 1 (Tuesday), the combination of
heavy volume selling in the Nasdaq, bearish «stalling action» in the S&P 500, and a «distribution day» (higher volume selling) the prior day forced us to cut long
exposure in our model swing
trading portfolio from approximately 38 % down to 17 % by the following day's open (May 2).
Due to increasingly stringent capital rules and
heavy regulatory costs, banks are cutting staff on
trading desks and reducing their
exposure to CMBS, leading to evaporating secondary market liquidity.