Fractal Algo Strikes Again, Infects Crude Oil

Tyler Durden's picture

A month ago we presented the strange case of the fractal algo gone amok while trading natural gas in a low volume after hours session. We expected that we would see this surreal trading pattern in other commodities shortly, although little did we know that it would impact the most important of them all, as soon as month later, and during peak trading hours. As the chart of CL EQ1 below shows, not even crude is safe any more from this aberrant trading algorithm which has now infected, it is safe to say, virtually every product. If NYSE Boerse's Duncan Niederauer is really confused about what is causing retail investors to depart in droves out of pure disgust with what are terminally manipulated markets (and not just stocks), we hope this chart provide at least a few clues.

We will bring you a detailed Nanex breakdown of the data shortly. In the meantime, enjoy this simple chart which leaves nothing to the imagination.

h/t Taro

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firstdivision's picture

This is getting fucking ridiculious.  Some days I wish an astroid would strike and wipe out all humanity for our stupidity. 

Hugh G Rection's picture

Anyone see the little EE raid around midnight PST?  Au and Ag have rebounded quite nicely.

TheGameIsRigged's picture

I could not fucking agree more.  This manipulation is out of control.  I am seeing it everywhere, in ALL aspects of my life - and it sickens my stomach.  When will we rage against the machine???

Dreadker's picture

When people stop behaving like those described in "Bullet in the Head"....

 

Believing all the lies that they're telling ya,

Buying all the products that they're selling ya,

They say "Jump!!" and you say "How high?"

You're brain-dead, you gotta f*ckin bullet in your head!

Hugh G Rection's picture

That takes me back to high school.  Rage was a great band.

Dreadker's picture

Indeed - whenever Tyler posts something like this I start listening to Rage again ;-)  So like every 15 mins these days lol

LudwigVon's picture

woahh wa wiki wiki wiki ... good bass guitar in that whole album.

Bullish_NoMatter_What247's picture

Rock that - "Buyin' all those ipad 2's that they're sellin' ya!"

Tejano's picture

Rage away.  The machine doe not sense your ire, nor does "it" care. You are powerless. Your rage is a product of your weakness.  

Manthong's picture

Bad case of the DT's.

Time for re-hab.

Conrad Murray's picture

I could not fucking agree more.  This manipulation is out of control.  I am seeing it everywhere, in ALL aspects of my life - and it sickens my stomach.  When will we rage against the machine???

Never. It's far too easy and safe to sit behind a monitor and feign disgust.

TruthInSunshine's picture

Bring in Lenny Dykstra to clean up the mechanism that is now a mess and crisis in these markets.

Or Bernie Madoff.

Or Charles Manson.

 

disabledvet's picture

Actually where's our man Al Gore Rhythm.  We need to get him on this case ASAP!

mayhem_korner's picture

Tossin' traders like a mechanical bull...

Robslob's picture

This must be a government algo...highly efficient ya know...

firstdivision's picture

Judging by the fact that I suspect it bought high and sold low...well I'd have to agree with you on that. 

Greyhat's picture

Two algos, .gov versus .oil. They can not drill out more oil, but they can manipulate the markets. Big oil money answered...

Smartie37's picture

Bustin' Out on Some Serious Funk !

surfersd's picture

free markets. it is JPM using their profits from their SPR purchase to have some fun.

 

slaughterer's picture

NY Fed trainees now have a new hobby now that POMO desks do not need to be manned.

dcb's picture

they need a tobin tax!!!

been trading that today with some success intrday, lots of buy and sell with stops. the intraday moves have been a couple percent uco and sco

espirit's picture

Relax, it's just a test pattern.  Like in the twilight zone.

dcb's picture

rather clear the point is to hit orders and cause selling then they buy very very quickly.

cougar_w's picture

This is not one algo, but at least two. They are trading against each other.

In a healthy market they would be trading against slow, stupid humans. But the way things are now, the only action out there is against other algos. Was only a matter of time before two found each other that had similar enough models they started bitch slapping each other.

Internal limits are probably the only thing that keeps these things from flash-whatever-ing the market. The coders are getting smart.

They can play this game for another hundred years.

mayhem_korner's picture

From dead-panner Steven Wright:

I put a humidifier and dehumidifier in the same room and let them fight it out.

TruthInSunshine's picture

Brilliant!

Unless Bernanke keeps 'pouring' liquid(ity) into the humidifier, the dehumidifier wins.

AGuy's picture

If Deflation occurs, Federal Tax revenue will drop like a stone causing the US gov't to default. This Inflation. Inflation if the gov't prints, or dollar becomes worthless overnight because the federal gov't defaults (aka the Collapse of the Soviet Union when no body wanted Rubles anymore).

 

 

agNau's picture

Paper will only trade as long as there is confidence. Inflation will only work as long as there is confidence. Confidence breaks, system breaks. Look for the Dynamic DUO! Confidence/Contagion Appearing soon at an economy near you!

espirit's picture

More like a single algo test to pick peaks and troughs, then stabilize price.  Replace the ramp or fall with price change recognition code, and SkyNet II can absorb errant algo defects.

Govt price control, et al.

Grinder74's picture

Does NY recognize same-algo marriage now too?

NotApplicable's picture

Can hardly wait for the Three Stooges Pattern to emerge.

"Oh, wise guy, huh?" *slap*

"Why I oughta..." *slap* *slap*

"Nyuk, nyuk, nyuk."   *slap*  *slap* *slap*

Greyhat's picture

This could be a reaper algo, sucking out the .gov vampire algos blood. Some kind of self service QE... :-)

Miss Expectations's picture

Couldn't be.  Sociopath's lies are not detected by polygraphs because the sociopath's physiology is unchanged when they lie.  My guess is that it wouldn't work on any elected official.

Piranhanoia's picture

I am not sure that I didn't miss a piece regarding hacking the exchange, but a question;   If hackers can get in any site in the world that is supposed to be protected,

Why the hell would anyone want to trade where you can see it is rigged and hacked regularly?  Is it the same old herd thinking they can latch on to something glorious if they follow the action?  

Has there been a story about the direct hacking of the machines that trade with each other?

Rynak's picture

There can't. This isn't hollywood. You can't just crack any machine wherever it is, and do whatever you want with it:

1. Both machines need to be directly connected (or one needs to takeover a machine that has direct connection to the target). You cannot just cast a magic wand and get action at a distance. In this case, The trader-machines (running the algos) are connected to the exchange servers - but they are not directly connected to each other. Thus, the only thing an algo-machine could directly exploit, is the exchange, not other participants.

2. Once you have a connection, you can't just wave magic wand and takeover a machine. Instead, the other machine needs to have a software error, which you can exploit to make the machine do something, which it shouldn't do. THIS is what usually is called a takeover - making buggy software of the target machine do the stuff you want it to do.

3. In the absence of a direct connection, you cannot takeover another machine - but you may be able to exploit errors in it, to make them crash or do stupid things. For example, CPL a few weeks ago made the experiment, of selling a stock, for zero .... the algos quickly went nuts on that.

Cognitive Dissonance's picture

Looks like it had a tiger by the tail.

Or the tiger had tail risk.

cougar_w's picture

Don' be mess'n wit da tie-gar. Mack dat tail an she be all whoop yo Nancy azz.

buzzsaw99's picture

time to lower oil trading margins.

firefighter302's picture

I had the exact same thought, Buzzsaw.

 

campag's picture

What you show here happens on a daily basis , this is not out of the ordinary. Also the price movement is smaller than usual. Yes it is corrupt and manipulative , many of the old  traders/ locals will not take outright positions - You want to see a bad market look at brent/wti flavour of the month again for the powers that be.  

Chartsky's picture

Exactly!

I trade CL every day and it constantly spikes 10-15 ticks from the algorithm trading.