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The Chairman
Victor Niederhoffer

Volume has been averaging some 700,000 contracts daily in SP minis these past six months, but now it's down to one-half that level.

It brings to mind that the purpose of markets, the purpose of price movements, nay the purpose of every signal, and ever quillet and quiddity in markets is to induce the public to play their normal role in the market ecology, i.e., contributing energy to keep the fixed costs of the system going.

And during the summer the ecology changes, and the public is no longer so ready to contribute the same way, the niches are much more specialized now, it's more like an arctic tundra than the rainforest of Mr. Sogi, and thus the cycles change, and one must seek different niches in the relative barren summer biome.

6/22/04
Comment by Ari Siegel: I have seen card rooms that were once bustling and then become fairly slow. Many reasons:
-- professionals have taken all the amateurs $ (this can happen more quickly if high -- stakes no-limit games are offered as the pro has great edge here)
-- amateurs have left for some reason so not enough action for the pros
-- better card room opens nearby (i.e. nicer facilities, better looking servers, special jackpots offered, more $ incentives, comps, etc.)
-- it is spring/summer and everyone is vacationing
-- new staff turns out to be complete jackasses
-- macro-poker-cycle means poker in general is less popular for time being
-- everyone loses their $ at the table games (craps, bj, etc.)
-- macroeconomic reasons.

This situation always presents problems for the pros. Options: stay with same poker room and just wait it out, move to new room and relearn all the players, go online, get a "real" job...also presents problems for amateurs that are still around.

A similar situation with horse track that gets very slow, probably a better example. What changes do the pros and amateurs make in betting activity? How do the lines change and is it possible to find overlays? What has to happen to cause activity to return? I wonder if one could use answers to determine some strategy for current financial markets.

6/22/04
Comment by Craig Cuyler: Everyone is expecting a barren summer and so it may be, but my most fruitful months in the S&P have always been July and December when many are away and hoping for a protracted range.

If I remember correctly the average weekly range for S&P and Nas resp for July 2002 was 80 and 102 points.

Vol is historically low here and complacency is high. Just as we walk away in disgust the pendulum will swing.