The market is now irreparably broken - if you are trading your own money today, or in the near-future you will lose it, and you can thank the SEC, the NYSE, dark pools, Goldman and all the other "liquidity providers" and market makers. The damage control by the mainstream media has failed. The European bailout has failed. The Nonfarm number was a failure, despite Obama's attempt to spin it favorably. The entire bear market rally is finally being seen for the sham scam we have said it was from the very algo-manipulated beginning. So is it any surprise that the VIX is now double where it was a few days ago. All those who sold calls on the VIX are getting carried away in bodybags, the only question is whether the decimation there is worse than among the ranks of the carry traders. At this rate the market is likely going to close near the stop limit positions in the 1,050 range, which will push traders over the weekend to take weapons grade doses of Xanax. Alternatively, mutual and pension fund idiot money will simply sell.
Overnight 1,135 was a relatively obvious resistance on the bounce. We briefly traded through on the NFP release but it remains resistance hee. Technically my preference we remain to the downside as the wave pattern is not complete and there was no divergence on the lows in terms of momentum. 1,113 is the support to obsrve on the day, and on a break there is a risk of retesting the lows and the medium term support at 1,040 which will be key. All eyes on 1,135 and 1,113 for now.
Fake +290K Payrolls "Added", Real Number Is 36K After Census And Birth-Death, Unemployment Goes Back To 9.9%, Underemployment At 17.1%Submitted by Tyler Durden on 05/07/2010 - 08:40
290K of which census was 66k and Birth Death was 188k. Hurray -the economy added a real 36k in jobs in April. Still, we are curious how the Chairman will not be forced to discuss tightening after this B/D adjustment inspired number (188K in April B/D, 81K in March). And in the meantime, headlines will read Unemployment back to 9.9%, and Underemployment back to 17.1%. Record jittery market bounces than calms down again.
- Administration pledges support for Greece while market regulators launch trading investigation.
- Calif. AG sues former pension fund officials for fraud.
- E. coli outbreak sickens 19 people in 3 states.
- Euro zone summit to try to cover debt crisis.
- Geithner urges Congress to equip regulators.
- German lower approves a law to free up Germany's contribution to a multi-billion euro rescue package for Greece.
- Jobs expected to grow in April; Wall Street tremors over debt crisis could limit future gains.
Today’s action left us amazed, and we have been warning about this stuff since December 2008. Where do we even start? Yesterday afternoon and evening all the business programming focused on how the markets were in turmoil, and Greece this, and overdue correction that, and fat finger the other thing. They couldn’t even recognize the story, as even the business media doesn’t understand that the markets are a changed structure and beast. The story is not a key-punch error. The story is a failed market structure. The market failed today. - Themis Trading
Since Goldman is the only party that ultimately determines domestic financial and economic policy through its Washington D.C. subsidiaries and puppets, the attached presentation disclosing the squid's thoughts on regulatory reform is about as significant as they get. Remember - what the Squid wants, the Squid gets. To be sure, that Goldman is virtually pretty much negative on practically every proposed "reform" is no surprise. Goldman likes to maintain its monopoly just as it is, for as long as it can. Pay particular attention to where Goldman Sachs sees the biggest opportunity: the $437 trillion Interest Rate Swap market. If Goldman were to formalize its monopolistic tentacles over this particular product, then it is pretty game over.
Here are the detailed Indications Of Interest blasts in the SPY blasted by various market makers. Not surprisingly JPMorgan, UBS and Morgan Stanley were the three busiest bees selling and buying in what was certainly a record day for their ETF and correlation desks. As theaudiorecording posted earlier discloses, we know that MSCO at least was a size seller. We are curious who were the buyers, i.e., doing the bidding of Liberty 33.
Greek 10 Year Hits 952 Bps, +100 On The Day, 5 Years At 13.6%, German Professors Announce Imminent Greek Bail Out LawsuitSubmitted by Tyler Durden on 05/07/2010 - 06:14
At this point there is no need to refresh the Greek curve in graphic form: the country is finished in its current format. Bailout, no bailout, the market has spoken. Even as the German Bundestag (lower House of Parliament, the Bundesrat will vote later) approves a bailout, which unfortunately is too little too late at this point, Market News reports that several German professors "will file a lawsuit at the German Constitutional Court today against the German aid for Greece." This will put a procedural stumbling block in the rescue machine, as Greece is in desperate need to getting funding this weekend: some estimate that the entire country has far less than 1 billion available as "petty cash" not to mention it has to fund billions in maturities. The end game at this point is all to clear, even German FinMin Schaeuble said that "s a consequence of the current crisis, rules for an orderly insolvency of a Eurozone member state should be established, Schaeuble urged, reiterating previous comments." Yeah, those orderly procedures are oh so easy to implement. Just look at how easy it is for that political corpse Dodd and his worthless bill: As the Dude says it best: "That's a great plan, Walter. That's f#*$&' ingenious, if I understand it correctly. that's a swiss f#($*& watch." Alas, the troubles in Europe have devolved to the comedic content of a Coen brothers movie.
"Guys this is probably the craziest I have seen it down here ever." Here it is, memorialized for the generations and away from the now openly ridiculous disinformation propaganda of the mainstream media, just what a full market meltdown panic sounds like: straight from the epicenter, the S&P 500 pits. Luckily open ouctry still exists, if at least for shock value. Click here for a first hand account of the most shocking 15 minutes in recent market history. Fat finger my ass.
Japan takes a bold step toward moving away from second to last place in the currency devaluation game. Bloomberg reports:
The Bank of Japan said it will pump 2 trillion yen ($21.8 billion) into the financial system after the Greek debt crisis caused instability in financial markets in the U.S. and Europe.
The emergency measure represents the bank’s first same-day repurchase operations since December. The balance of current- account deposits held by financial institutions at the central bank will likely increase to 16.9 trillion yen, up 800 billion yen from yesterday, the central bank said.
Of course, right now Ben Bernanke an d the US dollar are dead last in the fiat bonfire. But not for long.
Luckily, the only real winner out of the Keynesian death rattle will be gold. Which is the LBMA is doing all it can to manipulate the price lower right this instant. All the better - entry points will be fewer and harder to come by as the time to the final Keynesian unwind draws nearer with each passing day.
There is the danger of walking out of today's session with a sense of relief for equity traders, because that insane move was "just" a fat finger or at least it is the word in the media and on the street. There are three things to keep in mind: 1/ the market was down 3% already when the alleged input error happened 2/ we are still in the middle of a major unresolved currency crisis threatening all of Europe and that led to deadly riots already 3/ the financial industry does not need any bad press right now and detractors just got some more ammo to push tough regulation. - Nic Lenoir, ICAP
The Senate is officially bribed, paid for and in the pocket of the big banks. Too disgusted to even comment on this. This country deserves all that the "big banks" have in store for it.
Spreads exploded wider today across all markets as contagion from Europe smashed risk appetite everywhere as broad-based macro/index selling/hedging was clearly in play. So many record-breaking moves and breathless dealers that we are a little stunned still by today's action but to be clear, credit was leading equity down out of the gate, did not crash and bounce anything like stocks late afternoon, but closed at 10-month wides in IG and six month wides in HY.
A year ago, before anyone aside from a hundred or so people had ever heard the words High Frequency Trading, Flash orders, Predatory algorithms, Sigma X, Sonar, Market topology, Liquidity providers, Supplementary Liquidity Providers, and many variations on these, Zero Hedge embarked upon a path to warn and hopefully prevent a full-blown market meltdown. On April 10, 2009, in a piece titled "The Incredibly Shrinking Market Liquidity, Or The Black Swan Of Black Swans" we cautioned "what happens in a world where the very core of the capital markets
system is gradually deleveraging to a point where maintaining a liquid
and orderly market becomes impossible: large swings on low volume,
massive bid-offer spreads, huge trading costs, inability to clear and
numerous failed trades. When the quant deleveraging finally catches up
with the market, the consequences will likely be unprecedented, with
dramatic dislocations leading the market both higher and lower on
record volatility." Today, after over a year of seemingly ceaseless heckling and jeering by numerous self-proclaimed experts and industry lobbyists, we are vindicated. We enjoy being heckled - we got a lot of it when we started discussing Goldman Sachs in early 2009. Look where that ended. Today, we have reached an apex in our quest to prevent the HFT "Black Monday" juggernaut, as absent the last minute intervention of still unknown powers, the market, for all intents and purposes, broke. Liquidity disappeared. What happened today was no fat finger, it was no panic selling by one major account: it was simply the impact of everyone in the HFT community going from port to starboard on the boat, at precisely the same time. And in doing so, these very actors, who in over a year have been complaining they are unfairly targeted because all they do is "provide liquidity", did anything but what they claim is their sworn duty. In fact, as Dennis Dick shows (see below) they were aggressive takers of liquidity at the peak of the meltdown, exacerbating the Dow drop as it slid 1000 points intraday. It is time for the SEC to do its job and not only ban flash trading as it said it would almost a year ago, but get rid of all the predatory aspects of high frequency trading, which are pretty much all of them. In 20 minutes the market showed that it is as broken as it was at the nadir of the market crash. Through its inactivity to investigate the market structure, the SEC has made things a million times worse, as HFT-trading seminars for idiots are now rampant. HFT killed over 12 months of hard fought propaganda by the likes of CNBC which has valiantly tried to restore faith in our broken capital markets. They have now failed in that task too. After today investors will have little if any faith left in the US stocks, assuming they had any to begin with. We need to purge the equity market structure of all liquidity-taking parasitic players. We must start today with High Frequency Trading.