"Think about what we had 20 or 25 years ago. The paradigm was that unknown information seeped into the market and gradually moved price. You go to a currency market, and there's the same fundamental forces but you also have this tremendous flow of inside information. It isn't unknown inside information, but it's bureaucratic. It's bureaucrats at the Bundesbank telling the hedge fund guys what they're going to do. Now as a trend starts, it explodes immediately so that the trend-followers can't get in until it's over. It isn't slow. It isn't indirect. It's all at once."
"System followers see a signal in financials that they think is the same as a soybean signal, but it's not. The structure of the trend changes."
"Nine out of ten things that worked 20 years ago don't work now. In the last year, only a subset of those breakouts worked relative to the 20 to 40 ranges that worked previously."
"Fundamentals seep into price series. There's a corrupting element to trends when markets get overwhelmed by government action, or officials leaking information. That's when the patterns get muddied. If you look backward in time, the patterns tend to suggest more of a pure trend-following. This other kind of price movement is based more on short-term information known to a few trader groups. It makes a big difference in the price series. It distorts the natural formation of trends."
"This is probably the year of the fundamentals. I turn on TV and see T. Boone Pickens grinning every time crude's up five bucks. Fundamentalists would say crude is bullish whether it's at a 10-week high or low. They're more likely than the trend guys to want to buy at a 10-week low, which means if they're right, the trend guys are out of luck."
