Demonstrating An HFT Algo Gone Apeshit
We have long claimed that the HFT ploy to stuff quotes in an attempt to game other algorithms in pushing the bid or ask side higher or lower would eventually end in tears either for individual stocks, or for the general market, as was the case on May 6. Well, today we just experienced another mini flash crash, after some algo went apeshit and decided to hit every bid on the way down, all the way to 0.0001 (gotta love that sub penny quoting just above zero). Below we show how this algorithm pushed the stock price of Core Molding from its normal price of $4.12 all the way down to $0.0001 in the span of one second, after an HFT program went ballistic, and would have kept on hitting the subpenny $0.0001 bid in perpetuity. It must have been swell to be a CMT holder: one second your stock is worth $4.12, the next, it is worth $0.0001 (and no, not $0.0000, how else will the computers game the NBBO in subpenny increments).
The insanity of computers, captured below in perpetuity for your viewing pleasure.
End result: in tried and true reactive fashion, the Nasdaq cancelled all trades between 14:19 and 14:20. And when this happens again to the entire market once again, in a repeat of the flash crash, the regulators will be hopeless but to cancel all trades yet again. And happen it will, because ABSOLUTELY Nothing has changed since market close on May 5. But at least we have all the fake liquidity we could ever ask for and then some... Even if 99.9% of it is concentrated in Apple, Citi and Amazon.
Looking forward to week 17 of Mutual Fund Outflows next week.