If you ask me, trading hasn't been the same since the short sell ban on financials. Stocks used to move smoother when arbitrage strategies were being used by the hedge funds. The five minute charts have become increasingly choppy, so I've started relying more on the 15 minute. The following quote describes exactly what I think is going on:
"Analysts said the low volumes could be attributed to the absence of many traders, particularly statistical arbitrage players who would ordinarily be responsible for significant volume on a daily basis.
Dan Mathisson, head of Advanced Execution Services, Credit Suisse’s algorithmic trading platform, says that when the short selling ban came into force in the US in mid-September, hedge funds “turned off their long/short algos, volatility began to spike and bid/ask spreads widened”.
“If you take algos out, you enhance volatility. A lot of people don’t understand that yet. It’s tied to the hedge funds reducing their trading and exiting the market, leaving the market much more exposed to volatility,” he says."
Source: Financial Times
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