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Adobe Flash Smash

Tyler Durden's picture




 

Who says flash crashes only take stock prices to zero (or somewhere thereabouts). Adobe just flash smashed, triggering circuit breakers, but to the upside, as this time the HFT algo that goes apeshit lifts every offer. Following the unhalting, the stock has resumed trading somewhat normally again: we will let you know which trades the exchanges decide to cancel momentarily. Of course, we can't decide if it is more surprising that a circuit breaker actually worked for once, or that Waddell & Reed has not yet been implicated in this roughly 20th flash crash following May 6 (we will compile a full list of all HFT-triggered crashes soon). We hope to provide Nanex's explanation of which particular exchange malfunctioned on this one shortly.

The reason for the initial spike is the following speculation by the NYT:

Steven A. Ballmer, Microsoft’s chief executive, recently showed up with a small entourage of deputies at Adobe’s corporate offices in San Francisco to hold a secret meeting with Adobe’s chief executive, Shantanu Narayen.

The meeting, which lasted over an hour, covered a number of topics, but one of the main thrusts of the discussion was Apple and its control of the mobile phone market and how the two companies could partner in the battle against Apple. A possible acquisition of Adobe by Microsoft were among the options.

The New York Times learned about these meetings through employees and consultants to the companies who were involved in the discussions that took place or familiar with their organization, all of whom asked not to be identified as they are unauthorized to speak publicly by Microsoft or Adobe. Those involved in the meeting, from its logistical set up to the discussion that took place between the two companies, were instructed to stay very quiet about the two companies holding council.

Yeah, small entourage appearing at a competitor HQ for a "secret meeting" to discuss an acquisition. Riiiiiight.

Oddly enough, there was no discussion of an LBO of radioshack by the powerful pro-forma MSFTADBE empire. But yes, algos are all about the rumormill.

 

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Thu, 10/07/2010 - 15:26 | 633343 bugs_
bugs_'s picture

I'll have an Unhalting on the Rocks with a lime twist.

Thu, 10/07/2010 - 15:43 | 633410 Sucks_to_be_Smart
Sucks_to_be_Smart's picture

Fucking Waddell & Reed!!!

Thu, 10/07/2010 - 16:09 | 633469 Sudden Debt
Sudden Debt's picture

JUST FREAKING BREAK OUT THE CHAMPAGNE!!!!

 

MY ADBE CALLS JUST WENT HYPERBOLIC!!!! 260% GAINS!!!

AND JUST WAIT TILL THOSE 13MILLION SHARES SHORT WILL NEED TO BE COVERED!!

 

And I'm not even mentioning my OPEN puts!!!!

 

Thu, 10/07/2010 - 20:41 | 634085 New_Meat
New_Meat's picture

did they break the trade  yet?  Just wondering? - Ned

Thu, 10/07/2010 - 15:25 | 633344 tecno242
tecno242's picture

I think it would be hilarious if they let the buys stand.  LOL

Here HFT.. enjoy your Adobe stock you bought for 800K a share.

lol...

 

Thu, 10/07/2010 - 15:27 | 633346 TraderTimm
TraderTimm's picture

The algo must've had a misplaced ">" symbol in there somewhere. Dang logic inversion.

Thu, 10/07/2010 - 15:27 | 633347 Clark_Griswold ...
Clark_Griswold Hedge Mnger's picture

Sorry Tyler,

It was me.  I was at their web site downloading adobe to update my web porn viewing browser (to be current with SEC content) when it went crazy and triggered Waddle & Reed to sell 3.5 e-minis of the state of Sub Conscious which caused the sudden spike.

Thu, 10/07/2010 - 15:46 | 633423 williambanzai7
williambanzai7's picture

+++++

Thu, 10/07/2010 - 15:45 | 633425 williambanzai7
williambanzai7's picture

+++++

Thu, 10/07/2010 - 15:27 | 633349 JohnnyR2121
JohnnyR2121's picture

http://www.cnbc.com/id/39557679

 

"U.S. households have $70 trillion in assets," Sumerlin explained during a live interview. "And the Fed essentially needs to buy enough Treasurys and mortgages that you can get a bid on all those other assets. And when you have leakage in the international system it takes a pretty big amount to be successful. To me, it starts to get interesting at six to seven trillion dollars."

The Fed could outbid Microsoft for Adobe too. 

 


Thu, 10/07/2010 - 15:28 | 633350 homersimpson
homersimpson's picture

Looks like I didn't just press "any" key...

Thu, 10/07/2010 - 15:33 | 633358 Cognitive Dissonance
Cognitive Dissonance's picture

So do they set the DK line at 10% above the average price in the hour before? Or because people "made" money, is everything AOK?

Just askin'

BTW Tyler it's "Flash Dash". Feel free to use it royalty free. :>)

Thu, 10/07/2010 - 15:33 | 633374 TraderTimm
TraderTimm's picture

Haha, "Flash Dash". Brilliant.

+100

Thu, 10/07/2010 - 15:53 | 633451 LeBalance
LeBalance's picture

its scary how you read my mind. :)

Thu, 10/07/2010 - 15:30 | 633363 RobotTrader
RobotTrader's picture

Don't forget the flash crash that never recovered.....

UNG and GAZ

 

Thu, 10/07/2010 - 16:10 | 633530 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

ETFs are for losers.

Thu, 10/07/2010 - 15:31 | 633365 MountainMan
MountainMan's picture

ADBE (Adobe Systems) trading up 9% on chatter the MSFT might take over ADBE

Thu, 10/07/2010 - 15:35 | 633383 Id fight Gandhi
Id fight Gandhi's picture

Nice short here.

Thu, 10/07/2010 - 15:32 | 633370 Internet Tough Guy
Internet Tough Guy's picture

Since when does Apple control the mobile phone market? They aren't even number 1.

Thu, 10/07/2010 - 15:36 | 633387 TraderMark
TraderMark's picture

Here is an intraday chart of dollar vs "everything that moves on earth". The STOOPID market in pictures.  If your IQ exceeds 25, please exit the market

 

http://www.fundmymutualfund.com/2010/10/dollar-to-s-500-relationship.html

Thu, 10/07/2010 - 15:37 | 633388 LongSoupLine
LongSoupLine's picture

"I am an algo program, and I invented Windows7"

Thu, 10/07/2010 - 16:35 | 633610 NotApplicable
NotApplicable's picture

"And unlike Apple, I promote Adobe Flash."

Thu, 10/07/2010 - 15:37 | 633391 RobotTrader
RobotTrader's picture

Thu, 10/07/2010 - 15:55 | 633457 LeBalance
LeBalance's picture

Oh Lord! The Brazilians intervened in dollars alright, but not dollars for rial.

Doh!

Thu, 10/07/2010 - 16:23 | 633577 Cui Bono
Cui Bono's picture

So let me get this straight... Each Adobe share was worth a Brazilian for like 8 seconds???

Thu, 10/07/2010 - 16:02 | 633484 goldmiddelfinger
goldmiddelfinger's picture

Why edit out the week at $35? Because it makes the bullish chart look not so bullish.

Thu, 10/07/2010 - 20:44 | 634088 New_Meat
New_Meat's picture

As Suzy asked Ms. Smyth: "how do you make it last eight seconds?"

Thu, 10/07/2010 - 15:39 | 633394 cougar_w
cougar_w's picture

Looks like more insider trading, except with the TurboBoost Profit-o-maximus robotrader option enabled. Don't these guys ever give it a rest?

Thu, 10/07/2010 - 15:44 | 633417 williambanzai7
williambanzai7's picture

Yet another Waddell Event

Thu, 10/07/2010 - 15:49 | 633437 slaughterer
slaughterer's picture

Do not forget to include POZN on "The ZH Complete List of Flash Crashes"--took place just a few days before the market flash crash.   POZN was the practice run...

 

Thu, 10/07/2010 - 15:47 | 633426 Arkadaba
Arkadaba's picture

Given how often Adobe flash has crashed my browser .... no one deserves it more

Thu, 10/07/2010 - 15:48 | 633439 Precious
Precious's picture

Microsoft hosts Adobe meeting?  Misery loves company.

Thu, 10/07/2010 - 15:48 | 633440 max2205
max2205's picture

In the old days it would have gone up 30%.

Thu, 10/07/2010 - 15:53 | 633449 sysin3
sysin3's picture

MSFT + ADBE = a virus that eats itself

Thu, 10/07/2010 - 15:53 | 633453 williambanzai7
williambanzai7's picture

Those involved in the meeting, from its logistical set up to the discussion that took place between the two companies, were instructed to stay very quiet about the two companies holding council.

Right, stay very quiet. Thats a good thought. Which genius thought of that one?


Thu, 10/07/2010 - 16:09 | 633522 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

We'ol huntin' Wabbiths!

Thu, 10/07/2010 - 15:56 | 633464 tmosley
tmosley's picture

You think that's bad, that's nothing.  I got a real nasty flash rash after I had sex with Bernanke's mother.

Thu, 10/07/2010 - 15:59 | 633477 mule65
mule65's picture

Whoops! Alaska Air (ALK) -- $49.2 to $44.8 in a nanosecond.  Albeit news.

Thu, 10/07/2010 - 16:36 | 633617 NotApplicable
NotApplicable's picture

Meh, just some minor turbulence.

Thu, 10/07/2010 - 16:01 | 633479 plocequ1
plocequ1's picture

Possible microsoft acquisition.

Thu, 10/07/2010 - 16:03 | 633494 goldmiddelfinger
goldmiddelfinger's picture

ADBE down 15 percent in last 3 weeks

Thu, 10/07/2010 - 16:18 | 633556 Clark_Griswold ...
Clark_Griswold Hedge Mnger's picture

Possible Waddle Event

Thu, 10/07/2010 - 16:10 | 633498 Ieetseelmeet
Ieetseelmeet's picture

This is getting nuts!

Uncertified programmers writing code without checking for any typos compiling crap administered by recent quant school grads saying lets try this and see what happens.

All algorithms should be registered with the SEC.

Just like all doctors and architects and engineers and lawyers are registered, so should all who write code and plug into the mainframe at any exchange.

The code can be kept proprietary but it should be registered like any other instrument being trader or in this case doing the trade.

Code and their writers should be registered and copies of the code presented to the SEC for a determination of eligibility.

The CFO of the trading company should sign off on it everyday to say he is responsible for any damages incurred  to any traders due to their software malfunction.

 

Thu, 10/07/2010 - 16:39 | 633622 NotApplicable
NotApplicable's picture

All algorithms should be registered with the SEC.

LOLOLOLOLOL!!!!

Why, so Goldman can front run them all?

Thu, 10/07/2010 - 17:25 | 633733 ThisIsBob
ThisIsBob's picture

Robo-writers?

Thu, 10/07/2010 - 17:33 | 633754 TheAkashicRecord
TheAkashicRecord's picture

The FlashSmash(TM) algo is my IP, you must pay me royalties to use it.  The FlashSmash(TM) algo in collaboration with the FlashCrash(TM), also part of my IP portfolio, can cause great fun in the market for you and your fellow tradercriminals!

Thu, 10/07/2010 - 18:46 | 633893 Arkadaba
Arkadaba's picture

It is that bad. I'm on LinkedIn and because I'm a perl hack (self taught), because I know a little bit about data mining, because I have rudimentary knowledge of Java  and because I list financial as a hobby, I have been approached  by recruiters looking to fill positions in companies developing HFTs. I would love to do it as a research project but know that I do not have the programming skills to make it production ready. It does seem to be a bit of the wild west in HFT these days.

Thu, 10/07/2010 - 19:37 | 633980 TraderTimm
TraderTimm's picture

Do it, then just backdoor their settlements to funnel fractions of the trade to your own personal swiss bank account. A million pennies equals $10,000 - spread it around some of the more hyper-trading methods or up your take. Sounds like financial justice to me.

Thu, 10/07/2010 - 21:25 | 634160 Fred Hayek
Fred Hayek's picture

Wait.  Isn't that Office Space?  And Superman 3?

Thu, 10/07/2010 - 22:33 | 634279 TraderTimm
TraderTimm's picture

It'll be the Office Space sequel: Lumbergh's Billions

Thu, 10/07/2010 - 16:08 | 633517 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I heard the Brazilians are betting on the Vikings beating the spread this weekend.

Thu, 10/07/2010 - 16:18 | 633561 themosmitsos
themosmitsos's picture

Tyler, see this is where we disagree on the HFT thing in my opinion. The PPT ... imHo ... ARE the HFTs .... just through the INDEX :)

Thu, 10/07/2010 - 16:19 | 633563 SloSquez
SloSquez's picture

TD, LMAO on the W&R shit!!!!  Hilarious...but...wait...not so funny.  Another swipe under the carpet.  AAArrrrgh.

Thu, 10/07/2010 - 16:19 | 633564 Bose Einstein OracIe
Bose Einstein OracIe's picture

well that was pretty easy money. Had a shitload of oct calls at 31 :)

Thu, 10/07/2010 - 18:11 | 633822 CitizenPete
CitizenPete's picture

31? really what a fuc... Genius!  Now that's front gunning. 

Thu, 10/07/2010 - 21:11 | 634136 Artful Dodger
Artful Dodger's picture

...The meeting, which lasted over an hour...

Wow, the execs talked for an hour? Isn't that how long a job interview for a janitor lasts? Must have got a lot accomplished there.

Thu, 10/07/2010 - 21:18 | 634151 Godisanhftbot
Godisanhftbot's picture

 AS usual, I see no one lost a dime being short in front of this apocalyptic news, but they come out of the woodwork waving their calls up 75,000 %.

 Nice to see how much in common there is with Y@hoo.

 

Thu, 10/07/2010 - 22:33 | 634277 Bose Einstein OracIe
Bose Einstein OracIe's picture

Don't catch a falling kite, but dont short the shit either IMO. Thats why I long call OOM shit like this. Low cost possible high payoff on reversal or news. Nickel Options, Dolla payoff.

Fri, 10/08/2010 - 06:08 | 634598 Hephasteus
Hephasteus's picture

I think I saw Crocodile Dundee sticking his pinky and index fingers out at adobe saying out of the way dobe while taking on magical negro properties from his aborigine heritage. Cause it flashed up just shortly after that.

http://en.wikipedia.org/wiki/Magical_negro

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