The Day The Market Almost Died (Courtesy Of High Frequency Trading)
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.
Further to demonstrate this point, we bring our readers attention to our post from April 1, 2009 titled An Open Letter To Quant Funds. In it we said:
In his April 14th report Matt Rothman wrote about a dramatic, parabolic outperformance trend for names with high short interest, low prices and fundamentally weak names. He opined that all conditions for this trend to end are in place. Contrary to his very valid arguments, the trend accelerated yesterday.
Stocks with poor fundamentals, market share losses and poor earning prospects that quantitative managers tend to short, gained more than higher quality long positions.
It is clear from Mr. Rothman's report that this trend is a main contributor to outsized losses for quant managers. Some of his respondents admitted to hitting P&L stops. Recent acceleration of this trend, aka the "crap rally" clearly further damaged quantitative managers performance and resulted in further hits of P&L stops. The resulting short covering and long index hedges have perpetuated the market rally for now.
At this point, it is hard to say what set off this process, but it is currently accelerating and feeding on itself.
From the timing of Mr. Rothman's poll of quant managers, it is clear that smaller managers had ample time to exit positions and get flat. Continuation of the "crap rally" could indicate larger, systematic problems at the largest, most sophisticated quant managers.
We are paging Jim Simmons, DE Shaw, Citadel, LSV, Jacobs Levy and "significant"' others. Are you all right? We need you alive, small and nimble, to help provide liquidity and maintain orderly markets, not outsized, bigger than the market and dead.
If you still can, please come out and speak up before it is too late.
Today, it was too late. Liquidity disappeared.
And now we have to deal with the consequences. One amateurish way is to cancel trades which is what the Nasdaq is doing. This is simply pathetic, and indicates that everyone is powerless to stand before the consolidated idiocy of the HFT "cash cows."
One person who does get it is Senator Kaufman, who should be a shining example to all the other idiots and traitors in both Congress and Senate. Senator Kaufman issued the following release:
“As I said on the Senate floor today, the growing sovereign debt and banking crisis in Europe is very troubling. The U.S. needs to get its financial house in order through strong Wall Street reforms that will serve as a lasting bulwark against financial instability.
“I also have been warning for months that our regulators need to better understand high frequency trading, which appears to have played a role today when the US market dropped 481 points in 6 minutes and recovered 502 points just 10 minutes later. The potential for giant high-speed computers to generate false trades and create market chaos reared its head again today. The battle of the algorithms – not understood by nor even remotely transparent to the Securitiesand Exchange Commission – simply must be carefully reviewed and placed within a meaningful regulatory framework soon.”
It is time fot the SEC to step up to its own sole duty, which is not to guarantee itself jobs at Goldman Sachs (well, not so much anymore), or to watch 18 hours of transvestite porn each day, but to protect the US investor from such borderline criminal activity as High Frequency Trading gone amok. Forget the Fat Finger - today we were one Fed Finger away from a meltdown that would make Black Monday seem a joke in comparison. Next time we won't be so lucky.
We will have much more to say on this shortly, but we leave you with the words of Dennis Dick of Bright Trading:
Predatory Market Making May Have Led to Crash
Dennis Dick, CFA
Bright Trading LLC
On January 4th of this year, Rambus (RMBS) fell 30% in a matter of five minutes. It immediately bounced back and was later attributed to a trader with a “fat finger”. When this incident occurred, I discussed on Zero Hedge, the possibility of this being more than just a trader with a “fat finger”. (http://www.zerohedge.com/article/rambus-hft-fat-finger-precursor-things-come). I speculated that this could have been caused by a market structural problem. This could have been caused by a lack of liquidity due to predatory market making.
Today the same incident occurred, except this time, it happened in the overall market. Again, the media is blaming a trader with a fat finger. This may have been the catalyst but it was not the problem.
Predatory market making practices are driving liquidity providers out of the market. Algorithmic systems constantly step in front of displayed liquidity providers, and discourage them from placing passive limit orders. They are programmed to automatically step in front of displayed limit orders, to be at the front of the line for execution. This practice is especially prevalent in thinner stocks. If a human trader places an order at $20.05, the algorithmic system automatically bids $20.06. If the human raises their bid to $20.07, the computer goes to $20.08. This discourages true liquidity providers, and they place less passive limit orders.
Even in the 5 minutes that the market was crashing, these algorithmic systems were still abusing displayed orders. I placed a few buy orders during the crash, and my orders were still automatically stepped in front of by a penny. As my friend, Jason Fournier mentioned in his comments to the SEC, “not only are they discouraging liquidity, they are not allowing it.”
Broker-dealer internalization also abuses displayed liquidity as they continuously internalize retail order flow in front of displayed limit orders. In some cases they step in front of the order by as little as 1/100th of a penny, an abusive practice called sub-pennying.
Broker-dealers justify this practice by saying they were giving their customer price improvement. But they completely ignore the unquantifiable loss to the market participant who was displaying the order, and did not receive the fill.
These predatory market making practices are having a devastating effect on liquidity in our market. As true liquidity providers become more discouraged, and place less passive limit orders, the depth of the market gets thinner. Therefore, when we have a trader with a “fat finger” accidentally make a mistake, there are less liquidity providers to cushion the blow.
If these predatory market making practices are allowed to continue, eventually there will be no real liquidity in the depths of the market, and when there is a market impact event, we’re in big trouble.
Today was just a taste of things to come, if our regulators don’t take note.
And for the benefit of the SEC, this is what a broken market looks like.
(35 votes)
»
-
- Login or register to post comments
- Printer-friendly version
- Send to friend
on Thu, 05/06/2010 - 19:11
#335733
liquidity vacuum from toxic liquidity that isn't there when you need it
on Thu, 05/06/2010 - 20:03
#335903
The EUR/JPY broke before the equity market, as did the credit mkts. The "glitch" exacerbated the sell off obviously, but the market was already crashing before that. Ironically, the glitch probably brought buyers into the market...wonder if we'd have ended worse had there been no glitch, just gradual but sustained liquidation.
on Thu, 05/06/2010 - 21:34
#336160
THIS IS OUTRAGEOUS!!!! These trades stand that are within this range? DOwn 50% sorry that stands?
AAXJ NASDAQ 20.73 82.93 ACN NYSE Group 16.41 65.63 BDT NYSE Group 3.77 15.07 BDV NYSE Group 3.44 13.74 BGS NYSE Group 4.15 16.61 BICK NASDAQ 10.60 42.38 BOE NYSE Group 6.80 27.20 BRO NYSE Group 7.67 30.69 BTF NYSE Group 5.44 21.76 BWP NYSE Group 10.35 41.41 CFI NYSE Group 5.19 20.75 CGW NYSE Group 6.78 27.12 CHTP NASDAQ 1.47 5.89 CII NYSE Group 5.51 22.05 CLW NYSE Group 23.62 94.48 CNP NYSE Group 5.54 22.16 CNR NYSE Group 0.86 3.44 CSA NYSE Group 2.62 10.46 CSM NYSE Group 20.67 82.69 CTL NYSE Group 13.40 53.60 CUT NYSE Group 7.04 28.18 CVO NYSE Group 2.94 11.78 CVY NYSE Group 7.01 28.03 CWB NYSE Group 15.00 60.00 CWI NYSE Group 11.20 44.82 CYS NYSE Group 4.91 19.65 DES NYSE Group 17.02 68.10 DKP NYSE Group 8.08 32.32 DLN NYSE Group 16.62 66.46 DNP NYSE Group 3.54 14.14 DOG NYSE Group 20.46 81.84 DTN NYSE Group 16.69 66.77 DVY NYSE Group 17.94 71.78 DWM NYSE Group 16.29 65.15 DWX NYSE Group 18.66 74.66 DZK NYSE Group 19.99 79.97 EBIX NASDAQ 6.04 24.18 ECH NYSE Group 21.55 86.21 EEB NYSE Group 15.03 60.11 EES NYSE Group 17.88 71.52 EFG NYSE Group 19.96 79.82 EFO NYSE Group 24.49 97.97 EFV NYSE Group 17.56 70.26 ELG NYSE Group 19.78 79.14 ELR NYSE Group 20.96 83.84 EMG NYSE Group 24.37 97.49 EMM NYSE Group 20.41 81.63 ENY NYSE Group 6.57 26.27 EOS NYSE Group 4.96 19.82 EPI NYSE Group 8.58 34.30 EPP NYSE Group 15.01 60.03 ETY NYSE Group 4.78 19.10 EVF NYSE Group 2.56 10.26 EWK NYSE Group 4.51 18.03 EWX NYSE Group 18.00 72.00 EXC NYSE Group 16.52 66.10 EXG NYSE Group 4.34 17.38 EXLS NASDAQ 6.42 25.70 EXP NYSE Group 12.06 48.26 EZPW NASDAQ 7.43 29.73 FAB NYSE Group 10.12 40.48 FAX NYSE Group 2.39 9.55 FBT NYSE Group 12.94 51.76 FCG NYSE Group 6.57 26.29 FDV NYSE Group 8.36 33.42 FEX NYSE Group 9.70 38.78 FGD NYSE Group 8.21 32.85 FNI NYSE Group 8.21 32.85 FNX NYSE Group 11.20 44.80 FPT NYSE Group 5.23 20.93 FTA NYSE Group 9.48 37.92 FTY NYSE Group 11.96 47.82 FVD NYSE Group 5.44 21.76 FXD NYSE Group 6.60 26.40 FXH NYSE Group 9.05 36.21 FXL NYSE Group 7.17 28.67 FXO NYSE Group 5.20 20.78 FXU NYSE Group 6.12 24.50 FXZ NYSE Group 7.91 31.63 FYX NYSE Group 10.46 41.82 G NYSE Group 6.36 25.42 GCV NYSE Group 2.53 10.13 GEC NYSE Group 8.78 35.10 GFW NYSE Group 8.59 34.37 GII NYSE Group 15.03 60.11 GIM NYSE Group 3.76 15.04 GLAD NASDAQ 4.20 16.80 GLL NYSE Group 16.77 67.07 GMF NYSE Group 28.45 113.81 GWX NYSE Group 9.92 39.68 HANS NASDAQ 16.75 67.01 HAP NYSE Group 12.25 48.99 HEDJ NYSE Group 17.84 71.34 HHH NYSE Group 22.50 90.00 HNT NYSE Group 9.41 37.65 HSTM NASDAQ 1.87 7.49 HTGC NASDAQ 3.71 14.83 HTS NYSE Group 9.67 38.69 IAK NYSE Group 11.44 45.76 IAT NYSE Group 9.78 39.14 IDE NYSE Group 6.18 24.72 IEZ NYSE Group 17.05 68.19 IGM NYSE Group 21.06 84.26 IGN NYSE Group 11.02 44.10 IGV NYSE Group 18.51 74.05 IGV NYSE Group 18.51 74.05 IGW NYSE Group 18.46 73.82 IHE NYSE Group 22.72 90.88 IHF NYSE Group 19.54 78.16 IHI NYSE Group 22.97 91.89 IJH NYSE Group 30.46 121.82 IJJ NYSE Group 27.73 110.91 IJK NYSE Group 32.68 130.74 IJR NYSE Group 23.48 93.94 IJS NYSE Group 25.38 101.50 IJT NYSE Group 24.11 96.43 IPG NYSE Group 3.10 12.38 IPN NYSE Group 9.28 37.14 IPXL NASDAQ 7.10 28.42 ISI NYSE Group 20.35 81.41 ITA NYSE Group 22.16 88.62 ITC NYSE Group 20.36 81.44 IVE NYSE Group 21.65 86.59 IVW NYSE Group 22.86 91.44 IWA NYSE Group 6.52 26.10 IWB NYSE Group 24.70 98.82 IWD NYSE Group 23.40 93.58 IWF NYSE Group 19.88 79.52 IWN NYSE Group 25.09 100.35 IWP NYSE Group 18.66 74.66 IWR NYSE Group 34.45 137.81 IWS NYSE Group 15.60 62.42 IWV NYSE Group 26.39 105.57 IWW NYSE Group 30.94 123.76 IWX NYSE Group 10.36 41.46 IWZ NYSE Group 16.29 65.17 IXC NYSE Group 13.00 52.00 IXG NYSE Group 16.74 66.94 IXJ NYSE Group 19.42 77.66 IXP NYSE Group 19.44 77.78 IYC NYSE Group 23.92 95.70 IYE NYSE Group 12.78 51.14 IYH NYSE Group 24.86 99.42 IYK NYSE Group 22.66 90.66 IYY NYSE Group 22.32 89.30 JKD NYSE Group 25.88 103.50 JKE NYSE Group 22.87 91.47 JKF NYSE Group 21.39 85.57 JKK NYSE Group 26.82 107.26 JPM.PRS NYSE Group 8.76 35.04 JPM.PRX NYSE Group 8.32 33.30 JRO NYSE Group 4.47 17.87 KXI NYSE Group 22.21 88.83 LEA NYSE Group 28.38 113.50 LGI NYSE Group 5.75 22.99 LINE NASDAQ 8.82 35.28 MCN NYSE Group 3.24 12.98 MDD NYSE Group 10.04 40.16 MFM NYSE Group 2.74 10.94 MGU NYSE Group 5.62 22.48 MSPD NASDAQ 3.50 14.02 NFO NYSE Group 10.89 43.55 NHS NYSE Group 4.50 18.00 NLR NYSE Group 7.95 31.79 NTL NYSE Group 7.96 31.86 OKS NYSE Group 22.20 88.80 ONEQ NASDAQ 36.60 146.38 OPNT NASDAQ 6.16 24.64 OXM NYSE Group 7.71 30.85 PBJ NYSE Group 6.27 25.09 PBP NYSE Group 8.25 33.01 PBS NYSE Group 5.06 20.26 PBW NYSE Group 3.56 14.22 PDP NYSE Group 7.78 31.10 PEJ NYSE Group 6.14 24.58 PEY NYSE Group 3.25 12.99 PEZ NYSE Group 8.80 35.22 PFM NYSE Group 5.06 20.24 PGH NYSE Group 3.94 15.74 PHO NYSE Group 6.70 26.82 PIC NYSE Group 5.87 23.49 PID NYSE Group 5.21 20.83 PIE NYSE Group 5.53 22.13 PIN NYSE Group 8.36 33.42 PIV NYSE Group 4.59 18.35 PJM NYSE Group 8.15 32.61 PJP NYSE Group 7.60 30.42 PKW NYSE Group 8.77 35.07 PNQI NASDAQ 10.42 41.66 PPCO NASDAQ 1.31 5.23 PQBW NASDAQ 8.42 33.66 PRF NYSE Group 19.80 79.22 PRFZ NASDAQ 22.00 88.02 PSI NYSE Group 5.20 20.80 PSJ NYSE Group 8.59 34.37 PUW NYSE Group 9.20 36.80 PVR NYSE Group 7.95 31.81 PVX NYSE Group 2.82 11.28 PWB NYSE Group 5.58 22.30 PWJ NYSE Group 7.18 28.70 PWO NYSE Group 17.56 70.22 PWV NYSE Group 6.87 27.49 PWY NYSE Group 5.51 22.05 PXI NYSE Group 10.85 43.41 PXQ NYSE Group 7.72 30.86 PZZ NASDAQ 2.73 10.93 QCLN NASDAQ 5.82 23.28 QID NYSE Group 7.23 28.93 QQEW NASDAQ 8.11 32.45 QQEW NASDAQ 8.11 32.45 QTEC NASDAQ 8.39 33.55 RFG NYSE Group 24.40 97.58 RFL NYSE Group 5.47 21.87 RFV NYSE Group 12.16 48.66 RHS NYSE Group 21.02 84.10 RIT NYSE Group 2.97 11.87 RPG NYSE Group 13.78 55.10 RPV NYSE Group 10.30 41.20 RQI NYSE Group 2.67 10.69 RSP NYSE Group 16.33 65.31 RSU NYSE Group 13.20 52.80 RSW NYSE Group 21.60 86.40 RWJ NYSE Group 11.37 45.47 RWL NYSE Group 8.56 34.22 RWW NYSE Group 12.06 48.22 RXI NYSE Group 18.46 73.82 RYF NYSE Group 10.27 41.09 RZV NYSE Group 14.38 57.50 SAM NYSE Group 22.72 90.88 SCHA NYSE Group 11.65 46.61 SCHG NYSE Group 10.50 42.02 SCHV NYSE Group 10.34 41.34 SCHX NYSE Group 10.60 42.38 SCJ NYSE Group 17.29 69.15 SDD NYSE Group 8.67 34.69 SDK NYSE Group 9.33 37.31 SDOW NYSE Group 26.94 107.78 SDOW NYSE Group 26.94 107.78 SFK NYSE Group 13.47 53.87 SFK NYSE Group 13.47 53.87 SIJ NYSE Group 8.16 32.62 SJF NYSE Group 18.63 74.53 SORL NASDAQ 3.50 14.02 SOXL NYSE Group 13.55 54.19 SRTY NYSE Group 21.54 86.16 SRTY NYSE Group 21.54 86.16 SWH NYSE Group 16.33 65.31 TEI NYSE Group 5.44 21.76 TLP NYSE Group 10.66 42.62 TYP NYSE Group 3.50 14.00 UKW NYSE Group 13.83 55.31 UPW NYSE Group 14.09 56.35 URE NYSE Group 15.66 62.62 URTY NYSE Group 42.76 171.02 UXI NYSE Group 13.86 55.46 VALU NASDAQ 8.50 33.98 VB NYSE Group 24.52 98.10 VBK NYSE Group 25.18 100.70 VBR NYSE Group 23.52 94.08 VCR NYSE Group 20.56 82.26 VDC NYSE Group 26.91 107.65 VFH NYSE Group 12.35 49.41 VHT NYSE Group 21.47 85.87 VIS NYSE Group 22.20 88.78 VO NYSE Group 24.97 99.89 VOE NYSE Group 18.81 75.23 VOX NYSE Group 21.66 86.64 VTA NYSE Group 4.38 17.54 VTI NYSE Group 22.80 91.22 VTV NYSE Group 19.32 77.26 VUG NYSE Group 21.18 84.72 VXZ NYSE Group 32.76 131.06 VYM NYSE Group 15.28 61.10 WIN NASDAQ 4.14 16.54 WOOD NASDAQ 15.65 62.61 WSII NASDAQ 4.47 17.89 WWON NASDAQ 6.22 24.88 XGC NYSE Group 7.71 30.85 XLFS NASDAQ 10.36 41.44 XLIS NASDAQ 10.26 41.04 XLPS NASDAQ 10.52 42.08 XLVS NASDAQ 10.02 40.06 XLYS NASDAQ 10.04 40.14 XPH NYSE Group 16.24 64.96 XRO NYSE Group 8.48 33.94 XSD NYSE Group 17.88 71.54
on Thu, 05/06/2010 - 21:36
#336168
Nice formating, here this is easier to see
http://www.nasdaqtrader.com/TraderNews.aspx?id=ETA2010-30
click the xls file to open
on Thu, 05/06/2010 - 23:33
#336392
It took a long time for the market to get rise this high, it will take some time to destroy this market as well. There is a lot of money to still be made in the losses of others. Bernanke once said that the Fed had enough money that it could buy the entire US stock market. The tidal forces of money are now leaving the stock markets and going into something else. It will be interesting to see if the Fed can support this collapsing house of cards.
on Fri, 05/07/2010 - 03:30
#336509
The Fed has UNLIMITED money, it is simply 'printed' out of thin air. The Fed could buy the entire universe as we know it.
Of course then those dollars in your pocket become worthless and you'll need a wheel barrel full to buy a loaf of bread.
The USA needs to end the private member owned Federal Reserve. Their corrupt and ongoing illegal activities must be stopped or USA citizens and those doomed to have US dollars will suffer. The US dollar has already lost over 95% of its buying power (value) since its inception, and obviously this breaks the mandate of one of their mandates. Steady employment is another mandate, and they are failing there as well.
on Thu, 05/06/2010 - 21:50
#336203
Skynet's cooling fan inadvertently sucked a few nearby green shoots into its mainframe causing a minor "glitch."
on Thu, 05/06/2010 - 23:44
#336403
+1
on Thu, 05/06/2010 - 20:05
#335915
I confess. It was I Jim Cramer who entered an order for Proctor and Gamble and accidentally hit b for billion instead of m for million. I know you must ask yourself how then it is that a 20% drop in this one stock can affect the Dow to the tune of a 1000 points, and the S&P for 100 and the Nasdaq and Oil and Gold and blah blah blah. It's because Proctor and Gamble is the only stock that backs all these markets thus it cratering the whole of all markets by my little "typo". Get your head around that one. BOOYAAH!
on Thu, 05/06/2010 - 20:39
#336002
Oh, no, Jim! You bastard!
That just makes me hit the "House of Pain" button over and over again ... http://www.cnbc.com/id/18724672/
on Thu, 05/06/2010 - 22:36
#336314
Is that Proctologist & Gambler?
on Thu, 05/06/2010 - 20:21
#335953
Excellent post Tyler. That idiotic B instead of M story is the most ludicrous piece of drivel I have EVER heard. The focus on P&G was hysterical folly on CNBS. As I posted over on the BP thread, it is impossible to short a billion S&P contracts unless you are China and you have your Treasuries posted with the CME. And this was an S&P debacle. And if it was to short a billion Spy's--nah, pure bullshit.
There is no doubt that today's market action was everything you say. None, Zero, Zilch. No bug in the system.
SYSTEM FAILURE!
on Thu, 05/06/2010 - 20:40
#336005
I laughed out loud the moment I heard that. How stupid does CNBC think we are?
on Thu, 05/06/2010 - 21:19
#336128
yeah that was pretty funny.
oh, and where were all those "market makers" adding their so called liquidity?
but how do we know that a black box didn't engineer the whole thing INTENTIONALLY? i wasn't quick enough to buy aapl at 200 or f at 10.60 but those black boxes could.
http://noticiastech.com/wordpress/wp-content/uploads/2007/04/servidores_...
on Thu, 05/06/2010 - 23:13
#336376
Thank goodness it wasn't a "Tr", boooo yaaaah!
on Thu, 05/06/2010 - 23:16
#336380
Here's a commerative mug for today! Buy it. Maybe they won't go down for hours next week! All funds go to ZH!
http://www.zazzle.com/timmy_at_the_ppt_mug-168279006489241034
Leo...email me so you can post an image for me from time to time...
howardbeale72 at gmail dot com
on Sat, 05/08/2010 - 14:38
#338242
Myth Busters time: Let's assume the 'Billion theory" is true.
Perhaps it was an error in written communication. How are the numbers put into the system? By typing billion (or million) or using numbers? (They're most likely put in using zeros, which could create the error. However, the trader would check the order to before clicking 'send' in this case.
Perhaps it was an error in verbal communication. In this case, the trader in the pits receives a call from his boss.
"Hey, I want you to execute a sell order for 1 billion shares of PG".
Trader replies: "1 billion? You sure it's 1 billion and not million?"
Boss: "I repeat- Billion"
Trader: "OK. I just wanted to make sure... this trade will be ~15% of total daily volume. Are you sure it's PG and not C?"
Boss: "I repeat- PG. Now execute the damn trade."
Seems to me this myth is: BUSTED
on Thu, 05/06/2010 - 22:06
#336243
Great post, great comment Howard. I was in court all morning and came out to the news. I then heard the "BM" excuse and thought it added up to what its initials truly stand for. Being severely market ignorant compared to most of you, I then tried to get on ZH for most of the day. It's a relief to finally get through the door and hear some sanity
on Thu, 05/06/2010 - 19:15
#335740
Computer "glitch"? Yeah, but I still think this was capitulation/panic selling. The retail investor is not coming back. 401k's will be dumped starting tomorrow.
on Thu, 05/06/2010 - 19:28
#335789
Funnily, I put in orders to take bear-market rally profits in my 401(k) at about 11 this morning. Orders don't execute until the end of the day, though, so I got torched anyway. Good thing I'm under 40.
on Thu, 05/06/2010 - 19:49
#335865
well it wont be long before your 401 will be part of the great experiment of government .
best to sell now get some gold ,
on Thu, 05/06/2010 - 20:20
#335958
+ $1206
I'm 54 and cashed in my IRA in 2008, took my hits (taxes and penalties), but the money is now all mine.
And, yes, to second dumpster, start loading up on gold.
on Thu, 05/06/2010 - 21:54
#336210
I cashed out my IRA in 2008 as well, but I didn't take any hit because it was my fucking money. Took the part that my wife didn't pilfer on that month's mortgage and expenses and put it all into gold and silver. It was satisfying.
Today was satisfying. Today was like when your girlfriend swallows and you don't even have to ask.
I am Chumbawamba.
on Thu, 05/06/2010 - 22:20
#336245
you have a wife and a girlfriend that swallows.
on Thu, 05/06/2010 - 23:18
#336381
http://www.zazzle.com/timmy_at_the_ppt_mug-168279006489241034
on Fri, 05/07/2010 - 03:08
#336498
He probably meant his wife is already trained...
on Thu, 05/06/2010 - 22:14
#336266
Good going. I dumped my IRA in 1999. Took the hit and started buying gold/silver. Sure was excruciating back then. I agonized over buying gold at $400. I knew someone would have me committed to an asylum. Kept buying....
on Fri, 05/07/2010 - 02:21
#336475
Nice, you got a 300% return over 11 years, which is a 10% gain every year. Better than sticking it in a mutual fund, that's for sure!
on Thu, 05/06/2010 - 20:53
#336044
I was verry happy to find out that my company provides a brokerage link account in my 401k. Now i can buy puts with my retirement money!
on Thu, 05/06/2010 - 22:12
#336257
I got the following from my brokerage account when I tried to cash in:
"The reason for the delay in the cancellation was that we were experiencing delays from our market makers on the reporting of executed and cancelled trades. This problem has since been rectified."
on Thu, 05/06/2010 - 22:39
#336322
"Rectified" seems a wholly appropriate term. As in rectum. As in taking up the butt. Broken trades my arse.
on Fri, 05/07/2010 - 00:02
#336416
good eye! that one went right by!
on Thu, 05/06/2010 - 22:29
#336294
Not sure what you are invested in but I think torched would have been appropriate if we closed down 1k. The fact that we saw a 650 point swing back up was good to close out the day and give us a chance to get out before this thing drops for good. Good luck.
on Thu, 05/06/2010 - 19:40
#335831
I agree, and props to Zerohedge for staying on HFT.
on Thu, 05/06/2010 - 20:03
#335904
Tyler for President!
on Thu, 05/06/2010 - 20:57
#336060
Absolutely, and I want to see on his campaign ad poster him and that big rubber glove giving it to Blankfein. Go Tyler, go wild :o)
on Thu, 05/06/2010 - 20:59
#336067
We will need to see a birth certificate.. On second thought, I guess we won't!
on Thu, 05/06/2010 - 20:11
#335934
I agree. Thanks Tyler.
on Thu, 05/06/2010 - 19:41
#335835
I
on Thu, 05/06/2010 - 22:43
#336331
Holy Shit, Letterman Show;
http://www.youtube.com/watch?v=SRNrl-858qA&feature=player_embedded#!
on Thu, 05/06/2010 - 22:53
#336352
"If I weren't a tad close to the issue, I'd tell you not to leave the house" or words to that effect... Nice.
Bloomberg - Faber, Roubini & Leibowitz:http://www.bloomberg.com/avp/avp.htm?N=video&T=Faber,+Roubini,+Leibowitz+Own+Words+on+U.S.+Stock+Plunge+&clipSRC=mms://media2.bloomberg.com/cache/vxGLKA34iqlc.asf
Sen. Kaufman: http://www.bloomberg.com/avp/avp.htm?N=video&T=Senator%20Kaufman%20Interview%20on%20Stock%20Market%20Drop%20&clipSRC=mms://media2.bloomberg.com/cache/vQ1NLeG4aZKw.asf
on Thu, 05/06/2010 - 23:12
#336378
"If I weren't a tad close to the issue, I'd tell you not to leave the house"
- Brian Williams
I hope everyone is ready.
CD, thanks for the links, but, "they" have already pulled the videos, perhaps you can fill me in.
on Fri, 05/07/2010 - 15:43
#337149
I've long wondered why they bother to put up the clips in the first place, if they take them off after just a few hours.
Kaufmann interview is detailed in Tyler's post about him yesterday, the vid is (was) just a graphic illustration of how haggard and stressed out the guy was. Considering what had just gone down, I am not surprised, but he did seem both honest as well as painstakingly reasonable (though I thought I imagined much more aggressive emotions behind his cool, measured stance on the need to thoroughly examine the market structure and put in place effective regulation as soon as possible).
I did not have time to watch the Roubini et al conversation, too much going on. Just wanted to keep the ball rolling with current news on the topic that did not mention fat fingers or the ubiquitous 'technical glitch'.
on Fri, 05/07/2010 - 22:10
#337621
Rusty, CD, I was blown away by the Letterman show too, saw it aired. Letterman is a tool for the corporation, but I swear he slips in material here and there that is profoundly subversive. He recently had the scientist on that "discovered" the floating island of waste plastic in the ocean.
I am put in mind of "V" for Vendetta. Could be wishful thinking though. Thanks for talking about Letterman.
on Sat, 05/08/2010 - 05:26
#337798
+1
When the things we've been reading about and agonizing over here at ZH start coming out of a network news anchor's mouth on Dave Letterman's show, we have certainly passed the point of no return.
V for Vendetta is one of my all-time favorites. The dialogue is amazing. Between this film and the Matrix, I'm thinking perhaps we should call the Wachowski's to come and fix this mess. They seem to have grasped many of our existential issues long before many of us became aware of them...
on Thu, 05/06/2010 - 19:48
#335862
Here is the worse part. The HFT quants who f up will get most or a lot of their errors busted but the retail trader who got stopped out gets screwed.
on Thu, 05/06/2010 - 20:01
#335898
Overbet,
This is directly from your president. We are making them whole because we care for you.
Love,
Team OBAMA>
on Thu, 05/06/2010 - 20:22
#335963
Yeah i'm sure some retail investors took it in the keister today, you know when we were down -900+ stops were closing accounts out.
on Thu, 05/06/2010 - 21:52
#336167
Absolutely correct...Way to go NASDAQ. Thanks for creating more moral hazard than Benji and Tim Tim. Hmmmm...no downside for the HF traders when their algos go Frankenstein on them. Geez, I wonder how reckless their program trading will become now given their downside is limited.
on Thu, 05/06/2010 - 20:02
#335894
Agree
on Thu, 05/06/2010 - 20:02
#335901
No we wouldn't have ended worse because the "buyer" was the PPT.
on Fri, 05/07/2010 - 00:10
#336422
i wonder how much that prop-up costed.
obviously there were no players *under* this market - the few PPT players playing hot-potato with the top 5%, ignoring that there were no buyers underneath that layer. just dead air. "it wasn't suppose to break through!" whocudanode?
so... who else is gonna put some 'good till cancelled' limit orders in for goog and aapl at 40% below market just in case it happens again?? or should it be 50% below. what if it goes 60%? what if we're not there for the 10 minutes that makes this decision matter?
what fun!
on Sat, 05/08/2010 - 21:34
#338631
You'd be surprised. If they didn't sell after the ride from 14k to below 7k, they aint selling.
Everyone I talked to Friday seemed unphased. The complacency is stunning.
on Thu, 05/06/2010 - 19:16
#335742
Excellent work, Tyler. You guys have really been on the ball.
on Thu, 05/06/2010 - 19:16
#335743
Excellent work, Tyler. You guys have really been on the ball.
on Thu, 05/06/2010 - 19:18
#335747
/ES futures going green in 3...2...1...
PPT will NEVER allow this to happen again.
on Thu, 05/06/2010 - 19:21
#335758
I'm adding to my shorts on ANY green tomorrow. Long physical gold and short worthless paper stocks, bitches.
on Thu, 05/06/2010 - 19:26
#335779
These days "Never" doesn't last as long as it used to.
on Thu, 05/06/2010 - 20:48
#336028
Do you read me, HAL? HAL: Affirmative, Dave. I read you. Dave Bowman: Open the pod bay doors, HAL. HAL: I'm sorry, Dave. I'm afraid I can't do that
on Thu, 05/06/2010 - 19:18
#335749
Ah, I can feel my IQ slowly seeping back. Please, do not ever do that again. My eyes, they burn!
I think ZH is so shocked that their wildest wet dreams of market mayhem came true today that they're speechless.
To be fair to ZH, they're more visible than CR. I believe they've been called out directly by officials in positions of power for spreading gossip and rumors. So it's understandable they'd be crushed on days like this.
Wet dream? So, possessing a basic understanding of how the global ponzi game is constructed and must necessarily fail is a delusion? Sure, baby, sure.
on Thu, 05/06/2010 - 19:48
#335860
You know what I have noticed, the dedicated followers of all those blogs will read ZH in hiding, and then go to their own backyard and start barking. It is, what I call, 'the bravery of being out of range'. Almost all of them, in their backyard, will harp about market manipulation, PPT, broken markets, FED's intervention, etc. etc. etc., but when ZH talks about it, then, it is sacrilegious and conspiratorial. It is those "hidden" users who will hit the ZH site, en masse, whenever there is a market affecting news, which spikes the traffic to the server and takes it down. Then they go back to their own backyards and praise their overlords for keeping their house up and running during that period. When you have 200 piddly users exchanging 'you are so smart' messages amongst themselves, you don't have to worry about your site being down. Post articles like ZH does, then, I will start respecting you. Until then, go mount someone.
And guess who was buying at the bottom of the bear market and went 100% cash yesterday? Talk about timing. Impeccable.
on Thu, 05/06/2010 - 19:18
#335750
Hats off to TD and ZH. You guys called it. Thanks.
on Thu, 05/06/2010 - 19:43
#335839
Yes, they stayed the course.
on Thu, 05/06/2010 - 19:19
#335752
Bernie Sanders sold out with his amendment compromise. Ron Paul does NOT support the new language of the now feckless amendment. Bernie what was your price - a new maple syrup museum in Vermont.
It profits a man nothing to sell his soul for the world but you did it for Wales.
Any time you find out Senator Chris Dodd is in support of something - watch out.
According to our sources on the Hill, Senator Bernie Sanders caved to pressure from the White House and Chris Dodd and stripped out the Paul-Grayson language from his Fed transparency amendment.
What Sanders is now proposing is essentially the Watt amendment we all opposed last year in the House. In addition, it supports just a one-time audit.
Talking Points Memo reports that, "In order to allay some of the White House's and the Fed's concerns, Sanders has agreed to limit the scope of what the Government Accountability Office would be allowed to audit--but his plan will still require thorough review of all the Fed's emergency lending, beginning December 1, 2007."
Call Senator Sanders' office at (202) 224-5141 and tell him how you feel about this last-minute sell out.
http://preview.bloomberg.com/news/2010-05-06/sanders-narrows-scope-of-bank-bill-s-fed-audit-to-a-review-of-crisis-loans.html
on Thu, 05/06/2010 - 19:30
#335798
Expect nothing from the Hall of Winds other than business as usual. Kaufman, I believe, has real integrity -- Sanders has never been anything but an attention whore.
on Thu, 05/06/2010 - 21:28
#336149
Just sent ol' Bernie an email -
"BERNIE -
YOU WENT FROM HERO, TO ZERO. YOU WILL BE REMEMBERED - AND NOT IN A GOOD WAY."
on Thu, 05/06/2010 - 19:19
#335753
No one cares about HFT when the market is going up. Now heads will roll.
on Thu, 05/06/2010 - 19:24
#335772
Exactly, why are trades busted when share prices plummet, but not when share prices spike?
on Thu, 05/06/2010 - 22:31
#336303
Because HFT's can't margin-front a falling price. That's precisely why when they all decide to sell, we see what we saw today. No buyer remains.
on Thu, 05/06/2010 - 19:19
#335754
"It's getting exciting now, two and one-half. Think of everything we've accomplished, man. Out these windows, we will view the collapse of financial history. One step closer to economic equilibrium."-TD....nice work today.
on Thu, 05/06/2010 - 19:19
#335755
Can we get an Amen?
on Thu, 05/06/2010 - 19:38
#335827
Amen.
on Thu, 05/06/2010 - 20:55
#336056
My brothers, I give you an a-MEN and a hall-e-LU-jah!
on Thu, 05/06/2010 - 20:53
#336047
amen amen
on Thu, 05/06/2010 - 19:21
#335759
Skynet decided our fate in a microsecond.
on Thu, 05/06/2010 - 19:22
#335762
Tyler, do you have a statement concerning the ZH outage? As far I as could tell, ZH was down for over 2 hours, and it didn't seem to be simply overloaded server, and a reboot doesn't take 2 hours...
on Thu, 05/06/2010 - 19:24
#335775
Yes, that was a problem at a most inopportune time. I am thinking traffic jam. Lot's of financial urls were gridlocked for a while.
Don't block the box.
on Thu, 05/06/2010 - 19:26
#335783
this always happens when things get good too.......over 2000 viewers at one time?
on Thu, 05/06/2010 - 19:42
#335837
Try the link via the RSS feed repeater. That and hold your left hand in the air grasping a metal pen in the direction of the geosynchronous sats (equator) whilst chanting, "Maranathra...bring me Tyler."
on Thu, 05/06/2010 - 21:09
#336100
lol, nice one.
on Thu, 05/06/2010 - 19:44
#335844
I concur.
on Thu, 05/06/2010 - 20:05
#335916
My guess would be traffic over load. Even Denningers site got bombarded with hits when the mayhem broke out today.
on Thu, 05/06/2010 - 20:07
#335919
Yahoo Finance and Bloomberg were down as well!
on Thu, 05/06/2010 - 22:06
#336244
So was Charles Schwab and yes it cost me money. Got stopped out of a real nice, and getting nicer by the minute short position by one of the "massive bid-offer spreads" Tyler wrote about above. Humbug!
on Fri, 05/07/2010 - 00:19
#336430
Golden silence from Zero Hedge on this one. If you were cyber attacked, would you announce that it happened? Would you deny it? You would do neither if you were smart. Maybe HFT algos aren't the only things that kick in when the market falls off a cliff. Ah, the wonders of software. Just because Bloomberg and Shwab were down as well means nothing. Yahoo Finance and CNBC were having no problems. If you were the PTB, would you not want to shut down the very few outlets that make the truth known?
on Thu, 05/06/2010 - 19:22
#335764
Well, since everything was 'rescued', maybe this is just the wakeup call needed to turn the government against HFT...maybe you'll finally be heard, Tyler.
Or...maybe there'll be another 'incident' today, and another on Monday, as the credit markets take out one euro country after another. It doesn't take a genius to see that with the bond vigilantes stalking the globe, HFT days are very numbered.
Asian markets terrified today, lying low. Barely any movement at all, on any pair. An hour after Tokyo opening, one huge green candle buying EURUSD, buying USDJPY, buying risk, followed by a whole bunch of red nibbles taking the pairs straight back to the beginning again, and that's it. No pulse, no life, no commitment to any position until the northern markets once again awake the Kraken.
on Thu, 05/06/2010 - 19:48
#335861
Lol. very well phrased observations good sir!
on Thu, 05/06/2010 - 20:26
#335976
Renfield has been on a roll lately.
on Thu, 05/06/2010 - 21:13
#336113
Reni is an Aussie chick.
on Thu, 05/06/2010 - 21:31
#336156
hahaha so much for the pic! :-D
How ya doing, gorgeous?
on Fri, 05/07/2010 - 22:13
#337626
Hope you see this. I am doing well. Always enjoy seeing you post. I think it is a good thing they think you are a dude. If they knew what I know, well, I don't know if they would talk straight with you or not...
Or maybe they wood and that is the issue!
:-D back at cha' chickie!!
on Thu, 05/06/2010 - 22:05
#336237
The tornado sign was cool but I like this one better!
on Fri, 05/07/2010 - 22:16
#337627
Thanks. Good to see you out and about too.
I'm getting vertigo or something, sheeesh. Told a family member last night to batten down her hatches, and she actually listened, though told me it is not as bad as it seems. Trippy. Hope you are well.
on Thu, 05/06/2010 - 22:27
#336286
I remember " the Kraken" from a comic a long time ago. Early to mid 70's. Is that where you got it?
on Thu, 05/06/2010 - 22:45
#336334
The Kraken Wakes
by Alfred Lord Tennyson
Below the thunders of the upper deep,
Far far beneath in the abysmal sea,
His ancient, dreamless, uninvaded sleep
The Kraken sleepeth: faintest sunlights flee
About his shadowy sides: above him swell
Huge sponges of millennial growth and height;
And far away into the sickly light,
From many a wondrous grot and secret cell
Unnumbered and enormous polypi
Winnow with giant arms the slumbering green.
There hath he lain for ages and will lie
Battening upon huge seaworms in his sleep,
Until the latter fire shall heat the deep;
Then once by men and angels to be seen,
In roaring he shall rise and on the surface die.
(Emphasis mine) I dunno, I just thought it seemed kinda a propos. :-D
on Fri, 05/07/2010 - 01:26
#336453
Thanks for the Tennyson, Renfield. Nice to hear the music of words that is no longer with us!
on Thu, 05/06/2010 - 19:27
#335765
It was fascinating to watch what happened today.
There have always been special interests, back room deals and the routine sell-out of the general public for the benefit of a priviledged few. Politicians have always been a basic cost of doing buisness for the rich and powerful. The problem now is that the arrangement is out of balance due to excessive greed at the top of the food chain and excessive welfare payments at the bottom.
Bye, bye Miss American Pie...
on Thu, 05/06/2010 - 20:02
#335902
its not so fascinating when you have no control over your 401k
on Thu, 05/06/2010 - 21:29
#336151
oh, sure you do. sell all holdings, reduce contributions to 0% and withdraw all funds (with the tax hit). sounds mighty tempting all of a sudden in an i'm-taking-my-ball-and-going-home kinda way.
on Thu, 05/06/2010 - 19:23
#335766
thats what you get when the sole purpose of market moves is wiping out speculative positions. people eventually get fed up watching their money work against them in the PD hands.
on Thu, 05/06/2010 - 19:23
#335767
Re-posted for your reading pleasure. It was Harry Wanger who saved the day.
Reuters.......
Harry Wanger, well known around the rouge Zero Hedge web site as a market genius, saved the world from oblivion today when he stepped in to provide liquidity when no one else would. At the height of the panic, Harry Wanger, a tall handsome man with flowing golden locks and a strange glow, waded into the NYSE pits taking all offers in an effort to stem the tide and part the red sea. Grizzled 40 year Wall Street veterans were seen caressing Harry's hand as they profusely thanked him for saving their asses.
Harry reportedly was calmly discussing the remarkably strong jobs report this morning as an indication of a strong rebound in corporate hiring and the need to buy AAPL before the 50% run up. Once the market had stabilized, Harry was no where to be found. Some say he simply floated away while others claim his bare feet barely touched the trading floor as he quietly slipped away. This reporter will keep you up to date as new information is received.
on Thu, 05/06/2010 - 19:32
#335809
LOL. Very nice.
on Fri, 05/07/2010 - 00:17
#336429
i'm sure he also mentioned the world-wide consumer confidence number gains released today...
on Thu, 05/06/2010 - 19:37
#335824
I heard Barry is nominating him for a medal.
on Thu, 05/06/2010 - 19:45
#335845
Harry was at his dentist getting his veneers repossessed
on Thu, 05/06/2010 - 19:48
#335853
Apple printed below 200 I wonder if anyone got stopped out.Is that why we don't see harry.
on Thu, 05/06/2010 - 20:12
#335935
I posted on the BP thread that Wanger was is his troll cave....we need to synch our stories CD.
on Thu, 05/06/2010 - 20:26
#335973
Howard!
I got your 'Putting the douche in fiduciary' shirt in the mail today and I positively love it! I plan on wearing it with pride this weekend. Keep up the good work!
on Thu, 05/06/2010 - 22:20
#336279
wow, that is classic. i need one to wear to the office.
on Thu, 05/06/2010 - 20:32
#335990
HB
Wanger left his cave to appear on the NYSE during those crucial 14 minutes that saved the world. He then returned to his cave for some intense naval gazing.
Synced, Obama spin master style.
on Thu, 05/06/2010 - 22:31
#336302
I feel a little bad about trashing Harry earlier... well, for a little while anyway.
RockyRacoon
on Thu, 05/06/2010 - 10:54
#334794
I noticed a scarcity of Harry Bates, or is that Master Wanger. Since MB got a new moniker we might keep an eye out for HW to log-in under a new cognomen.
on Thu, 05/06/2010 - 20:58
#336064
Harry is my evil cousin.
on Thu, 05/06/2010 - 21:21
#336133
lol-brilliant!
Seriously though, don't be too hard on Harry-he's a man with a dream and I respect that. Change is hard.
on Thu, 05/06/2010 - 21:32
#336158
I want to be updated on his golden locks.
on Thu, 05/06/2010 - 19:23
#335769
The SEC understands high speed computers and fiber optic networks just fine--That's how they get all their porn.
on Thu, 05/06/2010 - 19:30
#335797
Now, this is high-quality comedy. Bravo!
on Thu, 05/06/2010 - 19:25
#335776
Well, glitch or no glitch, watch out for resonance and positive feedback.
http://www.youtube.com/watch?v=P0Fi1VcbpAI
on Thu, 05/06/2010 - 19:26
#335782
im not fully understanding why it is predatory to place a bid in front of your order. For sure it is jerky move, we called guys who did this in commodity options Tick-dicks. But how is it predatory?
on Thu, 05/06/2010 - 19:37
#335822
fmx...
You're kidding, right?
on Thu, 05/06/2010 - 19:49
#335867
what is funny is, I wasn't at first. then I looked at what I wrote and laughed. no idea why i was blocking on this.
But a question remains, what type of trading went down today? not the instant sub pennying step in front kind. is it as simple as prop desks front runningtheir own clients with flash orders?
on Thu, 05/06/2010 - 19:27
#335785
Guys, the market railled after Audit the Fed amendment was watered down into a feckless useless piece of paper.
Bernie Sanders caved into the banks and the white house. We on the far left and right were behind you and you sold us out. Ron Paul is against this new amendment language.
I think I saw this scene in braveheart. Tragic day in the last days of our representative republic.
on Thu, 05/06/2010 - 19:54
#335864
Are you saying the the Fed-R-rallies had to parade the nukes on the trailers for TV in order to get the congress "men" to back off on the audit? More plausible than the b vs m key story.
on Thu, 05/06/2010 - 20:36
#335998
"I think I saw this scene in braveheart."
Yes!
on Thu, 05/06/2010 - 19:29
#335792
I'll chime in with kudos for ZH - great article! We all need to analyze our own trading situations and portfolios in light of this event. A lot of people were screwed today by stops, a broken quote system, and margin calls with no way to respond. The obvious action by regulators would have been a halt on trading, but I suppose that is viewed as so 1980s. Denninger suggests we "unplug the f*ing computers", but that may be an overreaction as well. Maybe put a limit on the frequency of machine trades? Use any software you like, but it can only hit the markets once per minute, instead of the reported 100 Hz they can achieve now.
on Thu, 05/06/2010 - 21:10
#336106
trading tax: x% per trade over xxx#traded..........high enough so only big trading houses pay it.
on Thu, 05/06/2010 - 19:30
#335796
Regional Economic Outlook: Western Hemisphere Taking Advantage of Tailwinds May 2010 http://www.imf.org/external/pubs/ft/reo/2010/WHD/eng/pdf/wreo0510.pdf
on Thu, 05/06/2010 - 19:32
#335803
This "typo error" is a FALSE FLAG excuse to impose daily maximum index movements.. next step "orderly trading" rules intervention and future excuse to close tha markets if necessary. The end is nigh.
on Thu, 05/06/2010 - 19:42
#335820
there were no fat fingers today, HAL 9000 was contemplating the universe and blew up
on Thu, 05/06/2010 - 20:04
#335909
Orderly trading??
All sell orders to the back of the bus!
on Fri, 05/07/2010 - 02:46
#336488
TS..
Thank you, sounds plausible...
on Thu, 05/06/2010 - 19:35
#335808
worth revisiting Louis Rukeyser's summary the Friday prior to Black Monday in 1987
http://www.youtube.com/watch?v=2MyToTwag34
and ZH, well done!
on Thu, 05/06/2010 - 19:34
#335813
So zerohedge was down for hours( for me at least.) what happened. I'm betting goldmans secret sauce was deployed somewhere in the East
on Thu, 05/06/2010 - 20:51
#336039
- same here.
on Thu, 05/06/2010 - 19:35
#335814
when an electronic voting machine eats 18000 votes in a Florida congressional distric (literally, machine counted 18000 less votes than voters) they called it computer glitch also ----- glitch my arse!
on Thu, 05/06/2010 - 19:36
#335816
....and so it continues....
on Thu, 05/06/2010 - 19:36
#335817
It's too bad that the market has become synonymous with Las Vegas. I'd like to think that a good percentage of the folks on this blog would be willing to "invest" in the market if we thought that it wasn't a complete casino. Denninger is right. Even using stops is not going to help when HFT algorithms allow the big boys to trade with one another. Well, screw them. I've been on the sidelines in cash. It's time to move that cash to juniors too. Sorry this has to happen. I'd much rather have civilization.
on Thu, 05/06/2010 - 20:07
#335921
Incontrovertable fact: The house always wins... "on a long enough timeline."
on Thu, 05/06/2010 - 22:27
#336285
Yes, but there are people who can make a living playing poker even with the rake.
on Thu, 05/06/2010 - 22:51
#336350
Beautiful Henry...
on Thu, 05/06/2010 - 19:36
#335819
Some jackass over at Market Watch posted this tidbit this morning.
Transocean: Received $401 Million Insurance Recoveries So Far
http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=20100505...
'Several reinsurance companies have stated what their own losses could be due to the spill…
PartnerRe (NYSE: PRE) – $60 million to $70 million.
Hannover Re (NYSE: HVRRY.PK) – on the hook for $53 million.
Transatlantic Holdings, a division of AIG (NYSE: AIG), said it’s responsible for $15 million.
However, AIG’s losses aren’t limited to Transatlantic. A spokesman for Cameron International told me that AIG insured Cameron’s general liability for $500 million. It’s not yet clear what AIG’s total exposure is to the disaster.'
http://www.investmentu.com/IUEL/2010/May/the-gulf-of-mexico-oil-disaster...
Obama Oily Bird
http://blog.cagle.com/2010/05/04/obama-oily-bird
I'll bet this story gains momentum in weeks ahead.
on Thu, 05/06/2010 - 19:37
#335821
Zero hedge is the bomb.....They called this day--truth...I have been on the street for 25 years...That system is broken.....All that trading was away from the box.....I also love the way option traders spread their box(pussies) please I also love CNBC laughs at the whole thing...If I still ran my firm-computers would be flying out on to Broad St...Christ Wall Street is fucked..
on Thu, 05/06/2010 - 19:37
#335825
They're trying to rewrite history today. This was a crash. A result of the simplest and purest of market physics. A "fat finger" doesn't explain 18 full minutes of selling at the bid in the Qs and DIAs which preceded the final plunge. There were technical factors as well: the 200 day Moving Average was breached right at the time that the plunge started, triggering natural selling. That was also the moment that the demonstrations in Greece became violent. And the DXY breached 85.
We're coming off a topping process. Markets drop faster than they rise. There was evidence of a gathering liquidity crisis. Long trades and carry trades were unwinding with increasing momentum. Oil inventory and new jobless claims reports this morning came in below expectations.
In other words we had a perfect storm, a setup for a crash. Sellers simply overwhelmed bidders. And in this low volume, exhausted market at a top there simply were unanswered offers as large positions were liquidated.
What is scary is how arbitrarily and capriciously the NYSE and NASDAQ could simply nullify legitimate trades. Why didn't the safety mechanisms kick in? Where were the trading curbs, the 15 minutes of suspended trading? Would they be canceling trades if the "fat finger" made the market rise? I think we know. The playing field is full of trap doors, booby traps, land mines and leg holds. Even being right doesn't help since you can be frozen out of trades, or they can be canceled.
We are witnessing a crisis: a crisis of confidence in our markets, in capitalism as it is being practiced today and in the legal and tax system. The events in Thailand and Greece fit right in with the notion that class warfare is not only brewing, but is being fought already in the virtual trenches. But the pervasive anger and disillusionment that cuts across traditional demographics is spilling over to communities and the streets.
on Thu, 05/06/2010 - 20:04
#335874
Yes, plus China was down 5% and Japan 4% in earlier trading. Thank God I do not have to trade this market for a living.
I have said it before. Disintermediation, bitches!!!!!!!!
on Thu, 05/06/2010 - 19:55
#335882
This does not explain how, in 10 minutes, the market recovered as quickly as it dropped as if nothing had ever happened...Across multiple markets nonetheless.
on Thu, 05/06/2010 - 20:28
#335982
well said.
on Thu, 05/06/2010 - 21:31
#336157
Thank you. Nice post.
on Thu, 05/06/2010 - 22:46
#336282
Why didn't the safety mechanisms kick in? Where were the trading curbs, the 15 minutes of suspended trading?
At the time o' day it happened, they were only set to trigger on a 20% sell off.
I think the sell off has to occur before 1:30 (?) for 10% to trigger the safeties.
The timing reeks
Regards
on Fri, 05/07/2010 - 00:53
#336413
+10
If a technical glitch did indeed set this all off, we need this sort of distraction like a hole in the head. Conspiracy theorists are going to have a field day saying that this whole thing was created as a diversion so that <fill in the blank> could happen.
Cancelling trades doesn't get to the root of the problem, nor does it outwardly demonstrate that steps are being taken to ensure the long-term integrity and safety of the markets. Not allowing trades to go through without doing some root cause analysis just results in an erosion of confidence in the markets.
How about checking that no one recently took out massive short positions in any of the stocks that went down, or had recently picked up options buy up large quantities of stocks that back shot up massively during the "incident?" How about a full security audit if anything even slightly suspicious showed up in the transaction logs of any of the exchanges or major trading houses?
Doing such audits should eliminate any other "probable causes" and place the focus squarely on what went wrong (which in this case, was probably HFT), which is where it needs to be, given all the talk about the need for financial system reform that's been going on lately.
on Thu, 05/06/2010 - 19:38
#335828
Beware positive feedbacks. Exponential runs are baked into the cake.
They'll have to take the Exchange apart with an ax to fix it.
on Thu, 05/06/2010 - 19:39
#335830
Superior work Tyler.It is proof positive of the indispensability of Zero Hedge.
You told everyone of the danger HFT posed...and you were right.
Another EPIC ZH WIN!
However, it is sad to warn of the train wreck....and then have to watch it.Sometimes, being right is sad.
Of course, it also rocks!Especially when the dolts that brought us this disaster approach justice...either orderly justice, or something a bit less ordered and orders of magnitude harsher.The latter seems closer every day.
on Thu, 05/06/2010 - 19:40
#335834
the stock that went to a penny .. lol today was the day to grant stock options.. for several insiders ..
what a deal
just for fun. down from 30 some thing to a penny for a split amount of time // good enough
on Fri, 05/07/2010 - 00:23
#336431
wasn't that "excelar" or something? heard it but missed the ticker.
oh, to have had a few bucks of 'buy' orders in at 5cnts... sigh.
on Thu, 05/06/2010 - 19:41
#335836
So, now markets can be driven to circuit-breaker level in a few minutes. That's all you need to know, doesn't matter what caused it.
on Thu, 05/06/2010 - 20:10
#335932
Don't go to sleep. Ever.
on Thu, 05/06/2010 - 21:56
#336213
Exactly. Why bother betting on a fixed game? Unless you're the mark.
on Thu, 05/06/2010 - 19:43
#335840
On his behaly, I will now accept apologies from those who have been bad mouthing Robert Prechter on ZH for the last several months.
BTW - you ain't seen nuthin' yet - - -
on Thu, 05/06/2010 - 19:52
#335875
prechter on gold has been more than pathetic
on Thu, 05/06/2010 - 21:06
#336090
On his behaly, on his behiny - nobody cares because what happened today doesn't have squat to do w/ Prechter. Apples & oranges. Tyler was the one who gave us the what and the why.
Tell Bob to buy some gold before his skinny ass gets frozen out...
on Thu, 05/06/2010 - 19:47
#335841
Congratulations on your foresight, Zero Hedge. Excellent work, and I think we as readers even feel vindicated, some of us, for reading your work over the last year+.
On the bright side, your web site is surely having a very "high frequency" day and the threads will be "liquid" indeed.
(Oh yeah. Please won't someone break all trades today that cost the algorithms money? After all, they weren't "real trades"--kind of like the way all the new varieties of crossing stock aren't "real trades". Cancel the whole fucking market, maybe.)
on Thu, 05/06/2010 - 19:44
#335842
i.e. "behalf" - so blown away I can't spell - and yes I am short.
on Thu, 05/06/2010 - 21:08
#336097
Dude - there's an "edit" button...
on Thu, 05/06/2010 - 22:43
#336332
Better yet, there is a spell-check function.
I use it when I "know" I'm right.... just in case.
on Fri, 05/07/2010 - 02:51
#336490
Google also works...(for spelling check)
on Thu, 05/06/2010 - 19:45
#335847
15 years I've worked in the capital markets...and ZH is the most honest, tell it like it is, and knowledgeable place to be.
This is the explanation...not BS as "rogue trades". And if today is the day the market died...so bye bye Miss America and pie.
But at least I've been supplied a clever reason..I've been treated as a man, and I was and am short bloody euros.....
Thanks ZH...well done...and bring it on!
on Thu, 05/06/2010 - 19:46
#335848
If 70-80% of the market is HFT by the primary dealers, and you unplug their computers what's left? Looks to me like Catch 22, lose/lose either way.
We can talk about reforming the market when the Dow reaches 1500, by then all resistence will be broken.
on Thu, 05/06/2010 - 19:46
#335849
TD Rules!
on Thu, 05/06/2010 - 19:46
#335850
Personally I can't wait to see how the fat finger fucks spin this into a reason for not breaking up the TBTFs ... ;-)
on Thu, 05/06/2010 - 19:46
#335851
American Pie, if you're in the mood.
http://www.youtube.com/watch?v=uAsV5-Hv-7U
on Thu, 05/06/2010 - 22:46
#336337
She's Come Undone!
http://www.youtube.com/watch?v=VLMF5GM0Kt8
on Thu, 05/06/2010 - 19:46
#335852
tyler and a dozen others have warned .
some as long as a few years ago.. but the kudos go to the person who was the few moments from the call.
even the depression years gave out their lessons ,
nobody with a twitch of sense ,and mostly the zit faced wonder creatures raised at the alter of the Keynesian lie
gold a life line .. and still several here on these august forums read nothing see nothing but spout nonsense about gold .
the raiders of the lost zit cream bunch
on Thu, 05/06/2010 - 20:39
#336004
'amighty!
The dumpster is an invaluable resource here at mighty ZH.
Do what he and I say: Buy gold!
on Thu, 05/06/2010 - 22:48
#336342
Shhhh! You'll wake up the Yipster. He's napping on the couch in his mom's basement. He has to get up early to deliver those papers before his shift at the pizza delivery gig.
on Thu, 05/06/2010 - 23:35
#336394
Haha.....I was just thinking the same thing.
on Thu, 05/06/2010 - 19:46
#335855
Most likely direction for some time is flat while professionals and amateurs alike recover from the devasting glitch in the Matrix that we all just experienced.
In other news.....LEO got shanked like a wayward San Quentin soldier.
on Thu, 05/06/2010 - 19:47
#335856
Markets almost invariably go down faster than they go up.
I believe it's because, to get a wary public into the market, Exchanges need to create an illusion of never-ending rising prices. This won't happen if prices are going down for the same amount of time they spend going up.
Thus, you have all those 20-40 point positive days, we recently saw, followed by a sharp, violent drop.
on Thu, 05/06/2010 - 19:47
#335857
yeah, yeah--HFT. And debt goes up, oil goes up and riots go up--Lord knows that doesn't have an effect. What difference does it make when "free markets" cancel trades? How "free" is that? Sounds to me like a 4000 point decline tommorrow. We'll see...is this '87? They blamed "the computers" back then. yeah, that's right--we even had computers back then "TD." Of course CNBC fiddles while Greece pays 4% interest one day and 20% the next. And CNBC plays "blame the computer." It's a person cancelling the trades. That's a violation. Our markets are not only no longer free--they're perfectly arbitrary. One can no longer trade them and the only people who can "benefit" at this point are index funds and institutional investors. And the worthless scum-fucks at CNBC tell us on TV to "go fuck yourself." I'll listen to Cramer...but right now they're all nothing more than over paid cheerleaders who probably don't suck dick nearly as well.
on Thu, 05/06/2010 - 19:50
#335863
On the money! It was a near perfect storm. the 100dma and the major trend line (Mar - Feb lows) were a good support for THE humans. In fact, this human was ready to place a buy himself. The "Predators" went to hunt stops, in usual fasion, below support, but then with the 200dma in sight, the momo algos kicked in and took it down. Several major stocks bounced off their 200dma.
A "fat fingered" mistake = CNBC
My question is just because this happened on a macro level, why is it any less/more illegitimate than any other trade day?
on Thu, 05/06/2010 - 19:49
#335866
I thought God's chosen, Goldman Sach's Plunge Protection Team, fired up their algos to save our markets from the nefarious ones:
http://newyork.fbi.gov/dojpressrel/pressrel10/nyfo021110.htm
http://seekingalpha.com/article/147260-goldman-sachs-thoughts-on-the-dev...
on Thu, 05/06/2010 - 19:50
#335869
I love the fat finger story that is circulating. Come on people?? But, if by chance there is some truth to it then it would surely be showing up on someone's P & L soon. Meaning one of the walking dead banks (I mean hedge funds) just took one giant step closer to their awaiting grave.
on Thu, 05/06/2010 - 19:51
#335871
This was the second "fat finger" event of the year. Wasn't it? I may be wrong; if so, I apologize.
on Thu, 05/06/2010 - 19:57
#335878
Nice piece and I linked it. ZH was way out front of everyone on this.
Today was funny. I thought Matt Miller was going to make Joe Saluzzi throw up on his Skype connection this afternoon. I could not bear to watch CNBC. I turned it on for a minute, and they were screaming 'buy buy buy.'
Here is a bit of market trivia for all those tempted to blindly buy the dip...
http://jessescrossroadscafe.blogspot.com/2010/05/plunge-1000-point-drop-on-dow-driven-by.html
Now we go into the Non-Farm Payrolls report. This is one broken market, and the plunge was no accident, but the consequence of corruption, neglect, and obscenely ineffective political governance and monetary policy. But we might see a bounce on Friday, and quite a bit of official reassurance over the weekend.
The pattern of that market dislocation was for an initial decline on Black Thursday (24th), a recovery on Friday (25th), an uneasy or blue Monday (28th), and then the Great Crash itself on Black Tuesday, October 29, 1929.
But even then, with the market down about 40%, it had a remarkable distance to go. The bottom in US equities was finally reached, down 90% from the September 1929 top, in July of 1932, the trough of the Great Depression.
I am not saying that this will happen again. It turned out very differently in 1987 thanks to a flood of liquidity from the Greenspan Fed. Can Bernanke do the same thing again? One great difference between now and 1929 is that a fiat currency can be devalued, and enormous amounts of liquidity added, with a few phone calls. The Fed is already under pressure to open new dollar swaplines with the ECB.
But it is good to remember that caution is advisable when investing - always, but especially when one decides to exercise their greed reflex.
on Thu, 05/06/2010 - 20:36
#335879
+++Agreed ZH. US equity (and it's derivatives) market structure and mechanics are FUBAR at this point. Today was ridiculous and the "news" about Greece and the Euro was a swan of lilly whiteness.
First it was a P&G fat fingered trade then it was an S&P mini fat fingered trade. I don't know the real story at this point but you shouldn't even be allowed to whack futures in that size in a fast, down market. And NASDAQ wants a "do-over" - give me a break. How do you unwind trades that were made off of trades that are being cancelled?
I don't know about you but I'd rater have teenie spreads (no, not porn) and NYSE specialists printing money for themselves than this bullshit. Hey but if you dumped your 401K today down 900pts. it only cost you $9.99 commish!!
Is this what we fragmented the market into smithereens for?
Also, like flying an airplane, a computer can do the job just as well, sometimes better 98% of the time. But when you're landing at night with an engine gone in a thunderstorm you want a human being at the controls not HAL, the little-algo-that-could.
Even ten years ago you could say with a straight face that America's capital markets were peerless, a national treasure and the biggest detractors of the American economic/political /social system(s) would counter with "yes, but..." as opposed to "no way..."
Now? A few more days like this (wait until a US municipality bites the dust) and that torch is passing East, probably to China (or India). Bye, Bye Miss American Pie...
Remember Washington - besides medicine (d'oh!), aero-space(?) and scriptwriting for 30-Rock, this is like all we have left now.
on Thu, 05/06/2010 - 19:55
#335883
I finished reading the post and got my answer. Am truly amazed at the speed and volume of response on this thread.
on Thu, 05/06/2010 - 19:58
#335887
The US Dollar can go up who would have thought?.
on Thu, 05/06/2010 - 21:15
#336117
UUP UUP & away. Go you loose monetary piece of a good paper thing!
on Thu, 05/06/2010 - 19:57
#335888
Did the CME stealthily halt trading for 4 seconds at the bottom???
For those of you that have the ability to look at 1-second charts, go to today's bottom (14:45:30 EST) in the ES and look at price action. I have a DTN data feed that appeared to handle the crash perfectly, yet I somehow am missing 4 seconds of data (No high, low, open, close, volume, etc.). I even redownloaded the data tonight and am still missing these 4 seconds. I would like to know if this is merely a major coincidience (that the 4 seconds of data I am missing just so happens to be the exact bottom) or if it is possible the CME stealthily halted trading for 4 seconds in order to break the algorithmic selling.
on Thu, 05/06/2010 - 20:02
#335900
Fascinating...
on Thu, 05/06/2010 - 19:57
#335889
call it what you will..... i have been following you guys long enough, just to prove to myself that i'm not insane, or at least that i'm not the only one that's insane.... actually, NNT was the one that cured my depression, not because he told me something that i didn't know, but because he told me exactly what i was thinking. it's really tough living in that kind of company, even my mother hates me...... good job...! best regards, econolicious
on Thu, 05/06/2010 - 19:58
#335890
NASDAQ canceling trades of stocks that varied more than 60% between 2:40 and 3:00???
Has this ever happened before??? Sounds like a cheesy sports book...
on Fri, 05/07/2010 - 00:41
#336438
It's the new out of bounds rule. 66.7 percent retracements are the new out of bounds lines. Next they'll add field goals and guys to fib sequences withing fib sequences flag poles on chains.
on Thu, 05/06/2010 - 19:59
#335892
Wow, absolutely crazy day.
I don't think anyone believes the fat fingered trade hypothesis, everyone headed for the exits and the doors were too small. CNBC did its part to be fair, their incessant pumping of the Greek riots certainly didn't help to quell the situation.
I was listening to the live squawk of the pit and it truly was a thing of panic in there, everyone and their mother was selling and there wasn't a single bid, started off with Deutsch Bank which tells you something in itself.
on Thu, 05/06/2010 - 20:00
#335893
Was watching CNBC live as this was happening.
Loved Cramer's comments on how he wanted to hit 49 1/4 bid for 50k of PG.
Right... and HE'S the one that that got the stock back up to 60 right? Jokes!
on Thu, 05/06/2010 - 20:09
#335925
Cramer needs to brush up on basic arithmetic. The advice he gave on how play a situation like this is to buy a stock that was yielding 2% but is, now, yielding 5%.
For that to happen, a stock would have to go down 60%, not too likely considering the market only went down 3% and at its worst was down 10%.
on Thu, 05/06/2010 - 20:10
#335929
Did you happen to catch Cramer when he popped in on Kudlow's show, today? Wow, what a couple of meat heads. They were actually wasting airtime discussing the "possibility of hackers" as the cause of the drop. come on.
on Thu, 05/06/2010 - 20:31
#335989
I'm surprised they didn't blame the same group of short sellers who spread those nasty rumours about Lehman being insolvent.
on Thu, 05/06/2010 - 21:12
#336109
Those two buffoons really outdid themselves tonight. The only way they could top that would be to put on black face and do an Amos n Andy routine.
on Thu, 05/06/2010 - 20:03
#335899
Was Sergey on fur(low) today?
on Thu, 05/06/2010 - 20:13
#335906
I could use a little around here. My father finally "woke up" to whats going on, right about the time the DOW dropped 999.999 points, today.
When I started in on the whole government/FED/Wall Street et al business, again, for the 10th time, he sort of listened. I want to present him with some articles/posts that are fairly easy reading, and preferably are written by a name he might recognize. Any help would be appreciated. If this helps - he was surprised at the notion that the FED actually manipulates the markets by injecting liquidity through PM's. "Thats not a free market!" I know, dad. I love the guy.
on Thu, 05/06/2010 - 20:25
#335970
Can't really help, not knowing what names your dad would recognize that might be worth
reading... Best I can do is lead you to the clearing close to where I tumbled down the rabbit hole:
http://www.zerohedge.com/article/do-you-read-zero-hedge-review-zero-hedges-most-popular-articles-all-time2009
http://247wallst.com/2010/03/31/the-247-wall-st-twenty-best-financial-blogs/
You could do worse than looking up Rosenberg's longer missives here on ZH; perhaps former chief economists of ML is respectable enough a name. Also anything by Albert Edwards of Societe Generale (featured here often).
Yves at Naked Capitalism, Jesse at http://jessescrossroadscafe.blogspot.com/
I guess I could/should have been archiving/bookmarking more along the way...
on Thu, 05/06/2010 - 20:55
#336055
Thanks for the help.