Still a distraction, I think. I believe that momentum trades increase volatility, but that is far from my primary objection to the idea. It's just the one that miles took issue with.
I don't understand why this is an issue for you.
1) You have stated over and over that you are a buy and hold indexer, so momentum trading (or another other form of investing) should be of little interest to you as it won't affect your buy and hold strategy. Your strategy is entirely dependent on GDP growth and corporate profitability, in the long run. Unless the point of you being on this thread to argue to same issues repeatedly is simply to derail it into a nonsense gibberish about what Miles says and what you interpret him to say.
2) Obviously if a significant portion of investors followed a DM strategy then it would have a material impact on the market. But it doesn't, it never will, and you know that. There are too many funds that exploit market movements and way more people that believe in EMH than those that believe in DM. I would be much more concerned about hedge funds, large investors that employ stop-loss orders, flash traders, day traders, and the like than I would be about DM investors.
3) Miles has stated many times that DM does impact the market, but it doesn't impact it meaningfully. In fact, he compared a few pages back to a tear drop affecting the salinity of the ocean. I think that's a pretty fair statement. All trading impacts markets. If you look at charts for the S&P500 over the past year there is no evidence that DM amplified markets movements in any meaningful way. As Miles said before, a strategy that employs maybe one or two trades per year can hardly have a destructive effect on the market.
4) As I think you have pointed out, DM is always behind because decisions are made based on movements the market has already made. DM investors don't change their decisions from one day to the next, they make their trades (or they don't) once a month. We both know that for every 1 DM investor selling out of a position on the first market day of the month, there are countless of traders looking to take advantage of their move and buy when the market is already down (or sell when it is already up). Unless the DM investor so happens to make their trade and it is inline with that days' market fundamentals.
5) In today's information age, a crap article on Fox News or MSNBC has much more impact on the market (from a volatility perspective) than DM.
6) Much of your arguments are based on some theory that DM investing will catch on in a significant way and actually have a measurable impact on the market. While we're on this topic, let's not forget if everyone was a buy and hold investor there wouldn't be a market.