Dissecting The Crash

Tyler Durden's picture

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Mako's picture

I have no idea why trades are being reversed.   There simply was no market to sell into.

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MarketTruth's picture

Ahhh yes, FASB to suspend rule 157. Mark to make believe. it is MAY folks, sell the paper junk and buy physical gold then go away for the summer as countries financially collapse.

Moonrajah's picture

The whole situation is so way past bizzaro-land and firmly entrenched in the hands of a select few who game the game and don't give a rat's @ss about anything or anyone else, it's depressing. Where are the pitchforks goddamit? Or do we have to import those as well?

Waterfallsparkles's picture

Not suprising to me.  Watching the melt up with the frontrunning of every buy offer push the Market higher.  The Computers did the same thing on the way down pulled Bids on each sell order.

I just knew this would happen with Computer Frontrunning on the way down just like on the way up.  Instead of providing liquidity the HFT Computers withdraw liquidity and jump ahead of everyone else, what ever direction the Market is trading.

belogical's picture

Great Tyler, but the math adds up this way to me. Big vote in the senate. Looks like enough senators have balls to do something for change. Hmmmm, what do we do. We already paid them, so bribery won't work. I know lets tank the market like we did in March last year and in 2008. That will scare the shit out of them and they'll do what the want. Sound good Lloyd, Jamie, everyone on board, ok now were is that switch.

brooklynlou's picture

First rule of Ponzi schemes is make sure the rubes don't know its a Ponzi scheme. Yesterday, whoever caused the f'up basically showed the world that the market is a scam. That algos and scripts dictate the pace far better than any commissar.

I hope the opposite may happen; that the bribed may grow some balls when the realize the smartest men in the room can't figure out where the button for the fries is, but I'm too cynical to wager on it.

laurelweiner@yahoo.com's picture

the so called glitch took the spx to 50 ma---EXACTLY!

M.B. Drapier's picture

So: robots or conspiracy? Surely this demands a reader poll.

Mako's picture

Algos, I would say it's a fact at this point.   Tyler has done a good job of detailing how these things would turn out. 

You really don't have a market anymore.  Wait till you see gold move $100s in minutes in both directions. 

Implicit simplicit's picture

The banks and the fed are in an oligarchial duet. The tune is supported by various debt instruments and quant easing synthesizers. The song is complicated, fragile and dischordant because of the weakness of the sound system currency, the extended stock market musicians, and the dishonest goverment conductor. The song is actually a derivative of a real song that strikes a dischordant note to many. When will it stop? Only when the musicians refuse to play and the the indigent slaves  shout "I really don't mind if I sit this one out, because my words are but a whisper and your deafness a shout"

exportbank's picture

It was "The Gods of Circumstance"

Moonrajah's picture

More like the Gods of Circumcision.

chindit13's picture

My memory is a little weak.  Can someone tell me if they busted the VW trades back in '08?

Well, I for one sleep a lot better at night knowing we have firms like JPM, GS, UBS and BAC to save us from......JPM, GS, UBS and BAC.  I feel the same way about a fund into which Spain pays to bail out.....Spain.  These gave me one of those lightbulb moments, and I am now I in the process of patenting a new blood transfusion technique where the physician inserts a needle into the patient's right arm and then connects it to another needle inserted in....the patient's left arm.  Voila! 

UGrev's picture

I'm bailing on this muffugga.. pulling my 401k today and buying silver/gold. I've had enough of this effin bullcrap!

Kina's picture

Surely this would constitute criminal/illegal behaviour? If the regulators will do nothing, where is the FBI? These guys and their bosses who flicked the switch gets to spend some years with big benny. Then again criminal behaviour is the new normal with the regulators and co part of the crime gangs.

UGrev's picture

//begin tin foil

Don't you find it oddly coincidental that the Obama administration states

 

  1. Drill baby Drill: Oooops.. rig goes down, major catastrophe.. sorry, no more drilling
  2. Calls for more regulation: No really, more regulation.. oh yeah? don't believe me?  BAM , 1000 point drop.. see? we really DO need more regulation. 
Create a crisis, offer a solution.  //end tin foil

 

lucky 81's picture

i agree. lets get the fbi in on this. they figured out that 911 thing. this should be no problem. an investigation into, well,, someone.

Kina's picture

I pulled everything out of the market and superannuation into cash a few months back and bought gold and silver. Just biding my time.

BeerGoggles's picture

on the fat finger, don't firms have risk management software to track their tarders? There's would that let a 1b trade through?

Grand Supercycle's picture

 

Posted 1 week before the recent crash:

"The weekly DOW chart shows an expanding wedge indicating a significant move is probable ....this remains an overbought bear market rally and the uptrend could falter at any time.

http://www.zerohedge.com/forum/latest-market-outlook-0#comment-326767

tom's picture

Hinckley is close to the bone, O'Brien is off in left field.

When the market was already down 4% and fear was rampant, somebody very big went very short S&P futures, causing trading in all of America's top 500 stocks to shut down within the course of a couple minutes. What a stunt. Panic ensued, and predators ambushed.

It's absolutely obvious that the robots did not go rogue. The mainstream media that are today blaming the spike on robots are misinterpreting what the NYSE said. The NYSE blamed "computerized" sell orders, by which they mean sell orders put out on electronic exchanges, which has nothing to do with whether a human or a robot initiated the sell order. The NYSE is probably full of BS anyway - they probably just see an opportunity to blacken the reputation of electronic exchanges. If the audio file posted here that purports to be from the NYSE's S&P futures pit is real, and it sounds real to me, then a lot of the big shorting was done the old-fashioned way on the NYSE floor.

As for the robots, at least the vast majority by volume either shut themselves down, or were shut down by their attendants. I think at least most of them shut themselves down. Likewise, I think the pulling of bids by major market makers on all S&P index components was automatically triggered by the massive selling of S&P futures.

Could the big S&P futures short have been a fat finger? Fat fingers strike random securities at random moments, but this short struck exactly the right security at exactly the right time to cause the maximum amount of panic.

And what about those odd low prints in S&P index stocks? I bet our cowboys were on both sides of most of those trades, shooting out false prints in order to bring the index down in line with the futures. The cowboys made their money off the turkeys who oversold risk or overbought safety in bigger volumes at smaller price differentials. I suppose the cowboys roped themselves a few robots as well.

So who dunnit? Given their existing troubles I think we can rule out Goldman. Smells to me like a Steve Cohen job, but there are other candidates.

 

Grand Supercycle's picture

 

Posted May 1st - a week before the crash.

 '11,250 / 300 is an area of significant resistance and if this level can’t be breached it should signal the end of the March 2009 bear market rally - the weekly DOW chart shows an expanding wedge indicating a significant move is probable - this remains an overbought bear market rally and the uptrend could falter at any time - the VIX index continues to give bullish warnings which is bearish for equities - long term charts of key equity indexes continue to give bearish warnings and the March 2009 lows will be breached in my opinion - USD Index bullish warnings since 2009 on the weekly and monthly chart have not changed and further USD strength and thus EURO weakness is still expected '

http://www.zerohedge.com/forum/latest-market-outlook-0

http://stockmarket618.wordpress.com

BeerGoggles's picture

Tom, the emini limit is 2,000 contracts according to various sources.