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Hundreds Of Thousands Of Trades Canceled As LQD Flash Crash Confirms SEC Are A Bunch Of Corrupt Bumbling Buffoons
There are literally hundreds of thousands of trades that had to be DKed this morning at the open of LQD after who knows how many HFT algos went haywire and traded the ETF down from its closing price of $112 down to $102. Of course, all these broken HFT algo induced trades are being cancelled, as the idiots at the SEC look for a way to blame all this on Waddell and Reed once again. Next up: Barack Obama prepares to blame Waddell and Reed for the second Great Depression. Someone please forward the chart below of all the DKed trades in LQD and ask her to point out just which was Waddell and Reed's trade that set off the avalanche. In the meantime, we look for the next Waddell and Reed induced flash crash. Luckily, the porn-fetish morons have demonstrated once again they have a "very deep understanding" of if not the markets, then at least how to use taxpayer-funded credit cards to pay for web porn, and that it will always be Waddell and Reed who is blamed for every single daily, then hourly, then minutely flash crash from now to infinity.
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wow. look at that red tail
JNK next?
one flash crash a day
It was Emmanuel Goldstein, not Waddell and Reed. It has always been Emmanuel Goldstein.
Damn you Waddell and REED !
It as if someone went in and wanted to prove that this flash crash phenomenon really isn't a Waddell & Reed issue.
Even so, out corrupt enforcers at the SEC will somehow identify another patsy and avoid the heart of the problem.
Our regulators are really fortunate that this is another very isolated incident. Because when it gets widespread, there will be hell to pay. Can you imagine the damage inflicted if someone got wind that you could do the same thing Waddell did (inadvertently) to even a broader section of the market? It almost appears what happened to the LQD is roughly equivalent to a test run.
These waters are not safe for sailin', matey.
They cant be corrupt and bumbling at the same time. I would definitely agree with Corrupt. They know what their intentions were all along.
"They" is plural, meaning that it can be one part corrupt, and one part bumbling. Collectives make a nice cover for the individuals within.
Of course they can. Why on earth would you have that idea? It doesn't take a genius to be currupt and there is no such thing as being too dumb to be currupt.
+1
Saying that corrupt and dumb can't co-exist implies that enforcement and justice exist. Au contraire. We have cronyism. There are only bribes, shakedowns, handshakes, and, if you really piss off the wrong person, mysterious plane crashes.
Now THAT is a nice avatar.
The mind wanders to what it is she's saying (and whether it's coherent!) :>D
It has become almost a daily occurence. How widespread does it have to get?
The May 8 flash crashed centered on the ES and about 4-5 HFT quote stuffing/ cancelled trade issues by HFTs.
Let's try for the 5 largest ETFs and/or futures contracts and 100 HFT quote stuffing snafus on S&P 500 stocks.
That oughta do the trick.
Toodles!
"Can you imagine the damage inflicted if someone got wind that you could do the same thing Waddell did (inadvertently) to even a broader section of the market? It almost appears what happened to the LQD is roughly equivalent to a test run."
Interesting point!
This complex/chaotic system running at warp speed is almost inevitably going to metaphorically speaking 'throw a piston' and this engine's gonna blow apart. Actually you can forget the 'almost'... it's just a question of when and the details.
Our entire monetary system is in the hands of fools and maniacs.
chart looks like free and open market supply and demand to me...
http://stockcharts.com/h-sc/ui?s=LQD&p=D&yr=1&mn=0&dy=0&id=p86610590017
hehe
Tyler,
I wonder why there haven't been more "France Telecom" type incidents at the SEC? Shouldn't they be ashamed and depressed? Or is that what all the tranny porn is for?
Got a flat tire this morning - man, I hate Waddell and Reed!
LOL
My hemorrhoids are killing me. Damn that Waddell and Reed.
Oh, sorry, that's the Fed.
Those aren't hemorrhoids you were feeling back there. That is an ass raping, we are all feeling it.
You already know the sensation, eh?????? :)
omg
They shot my dog and stole my wife!
I'm sure gonna miss that dog.
You need to start penning some Country & Western music, my friend.
I'm sure Waddell is blaming Reed and vice versa.
Those fuckers at Waddel and Reed!
It would be really great if the SEC went after W&R but they became stuck to their chairs this morning during company syncro-jerk.
+100
market is so broken.... it kills me.... one thinkg I respect about this info source is ZH and readers are on it and calling the breaks. Again kind of sickening... I feel like we are in a mad max world here... every man for himself.
Dre
__
http://capitalmercenary.blogspot.com
"it kills me...."
Hope so.... But if not; suicide? GWB is popular.
phunny.... phunny...
This hft issue needs a face. Previously it has been GS. This is an attempt to identify a patsy (W&R) in order to give a pubic face to the selected villan and shift away from GS. This is all elementry school stuff. But it works.
May SAC should step up.
Yup, like Madoff.
hundreds of thousands of "trades"?
Let's just hope they don't start trying to program aimbots.
http://www.youtube.com/watch?v=NYGlWjIKoY4
Can you arrest an algorithm?
You can attempt to unplug them, but I suspect this may have dire consequences from Skynet.
No, but you can pummel a quant.
+10
You're great, Tyler!
G-Pap is to announce that the Greek debacle is also W&R's fault.
Shut the SEC down. Start over. It's not like they are doing anythin positive right now.
Surprise, surprise! The government regulators are there to protect the big guys. Allways.
argento hombres!!!!!!!!!!!
LQD has made new highs divg'ing from the rsi...it will close below 99 soon,,,watch the machines all have the same sell sig and pressed at the same time. Good luck.
Wouldn't it be easier if the SEC just set prices for securities?
+100
+1000!
That is such a crazy idea, it just might work. Don't give them any ideas.
In the future there will be only one banker and it will be the US Gov't.
"He had won the victory over himself. He loved Big Banker"
Cracks me right up! If youre short and happened to get a pop, watch out because the FED wasnt in on it and they cancel you out. Unreal.
I expect that the LameStream Media will cover this and credit Tyler and ZeroHedge with a hat tip...in an alternate universe.
I just read somewhere that Waddell and Reed plotted to kill John F. Kennedy. It's true.
The latest:
"I got Wadell & Reed-ed" today..."
"I took a Wadell & Reed on that one"
That fucking Waddell and Reed. I blame them for my inflamed Hemroids.
They have a very deep understanding of their anal track.
BTW, here is a quote from the fictional story I published three days after the May Flash Crash.
http://www.zerohedge.com/article/call-%E2%80%93-fictional-look-25-minute-market-crash
Yep! The people will believe what theyre told to believe because they want to believe. And the beatings will continue until morale improves.
where is your stuff published?
Surely you don't mean posting here? That would be quite pretentiuous to call that being 'published', wouldn't it?
Don't call me Shirley.
one of my favorite all time jokes. classic.
Surely it's best delivered with a straight face and a serious demeanor, "Airplane" style. :>)
http://www.imdb.com/title/tt0080339/
http://www.youtube.com/watch?v=Qo7qoonzTCE
roger roger
What century are you living in?
one where there is a difference between 'publishing' something and posting a note on a board.
my 6 year old niece posts on the net too, guess she's 'published'.
when she ran to her mommy saying 'i'm published i'm published' i didn't think it was pretentious though, i just thought it was cute, she's 6 after all.
Publishing just means it's out there for people to read. Nothing special to where that happens.
Oh, unless you're shooting for tenure, then you need people to believe 'publishing' means something important.
just imagine if blog participants all started prefacing their posts with:
'I refer you to my recently published comment above'
if that wouldn't make you gag, i dunno what would : )
Congrats on the niece's hustle! How does she cash her royalty checks if she's a minor?
Cracks me right up! If youre short and happened to get a pop, watch out because the FED wasnt in on it and they cancel you out. Unreal.
On knees in the rain looking upwards shaking fists in the air 'DAMNNNN you Wadell and Reid!! Damnnnn youuuuuuu'!!!!
It ain't all that bad, I made a few pennies off of TZA this week. IT WAS HARD WORK!
SEC regulators learn about the market in those little retirement planning seminars mandated for all employees. They also get quarterly statements that teach retirement account holders about how mutual funds and stocks and bonds work. You see, they are not entirely unfamiliar with markets.
W&R should be ostracized severely. Selling is not allowed.
Thank God the guys who did the selling all got bailed out by having their trades cancelled. We need to protect the stupid and the weak. That is how a strong market grows.
Not my fault
I have a friend who has a cousin who said they saw Wadell & Reed on the Deepwater Horizon prior to the explosion.
Hey, wasn't it Wadell sitting beside Osama Bin Laden in his last video (or maybe it was Reed)? Hmmmm...
I say let the market sort itself out. Enough of this stuff and it will only be traders trying to game each other and eventually people will request a computer free trading environment. Just part of the system resetting itself.
What a market! These idiots get burned by their own stupidity, and they get bailed out by having the trades cancelled. The stock markets in the US are truly a joke! They should have to eat the trades!
i think having them eat the trades is a great idea, and would 'solve' the problem pretty quick.
only problem is the poor saps with stop loss orders in who get caught...
Tranny chasers
Grow up. Get over it. Stop junking neutral comments.
Why does anyone think that this is attributable to HFT? The drop was clearly the result of market sell orders, which has the finger-prints of less sophisticated participants selling with market orders or stop loss orders getting triggered (which are market sell orders).
Or is the thinking that HFT should always be there to take the contra side of a market order no matter how big the order is in order to bail out the retail and institutional investors who don't know how to place a limit order?
Do you think these trades should be cancelled?
> Do you think these trades should be cancelled?
No
However mom and pop investors who had stop loss orders hit during this period most certainly are (as they were during May 6th).
Check out the LQD message board and Yahoo which already has some folks talking about how their stop loss orders hit today and how thankful they are that the trades were cancelled...
Interesting isn't it. You have to let the innocents get raped to have a "natural" market reaction.
If we are to permit HFT we must, I mean must, have some of the most excellent computer programmers in the world running the SEC and proposing legislation to congress that would genuinely prevent fraud and prevent these market irregularities.
Until then, this is a bunch of out of control cyber cowboys, out on a drunken looting binge who do not care about the consequences of their actions at all.
Peter, it is an enigma. What I want to do is forbid computer trading. I know the genie is out of the bottle and that is stupid. But when you have humans in the seat, you have someone responsible. When you have programs trading against each other, it feels like it is going against nature itself and asking for the kinds of trouble we see happening almost daily. Who is responsible? The programmer? The company? Let them eat it then. If it is a hardware malfunction, yeah, cancel the trade. But programming....
I get it this isn't easy to solve. But no one is doing anything and it seems like it is a separate issue from the FED or any of a number of the frauds being perpetrated.
I agree, Mom and Pop shouldn't be playing in the road if they haven't yet learned about traffic. If you play in the market and get fucked, you may be both naive and ignorant, but you shouldn't be protected from learning something about the real world.
Hi peter, haven't seen you on here in a while.
What was more ludicrous were the 2 articles a few days back on how, during a midday dump of AAPL, people thought that was a flash crash too even though it was just big blocks taking out all the bids on the book.
Yep, its a bunch of grannies long with market order sells and stop losses causin it....damn you pension grannies DAMN YOUUUUUUUUU!!!
+80.69
Stunning news from MarketWatch:
'Flash crash' report blames algorithm"
Really? I never woulda guessed. I'm so glad we got that sorted out now start up the algorithms again.
Waddell & Reed as "Man in Car"....SEC as "Frank Drebin"
http://www.youtube.com/watch?v=rSjK2Oqrgic&feature=related
I have to comment again. Who is the arbiter of what market moves are valid? If the F#@$ SP drops 10% in an hour will ALL trades be cancelled? These guys should have been around in 1929 on black Friday, we could have avoided that market crash and skipped the entire great depression. A big Joke!
Fed takes a mulligan...
And another...
...and another...
Conspiracy Theory:
They get everyone to put their Money in the Market pumping QE2. Then out of nowhere they Flash Crash the Market but this time they do not bring it back up. Kind like the Crash of October 29, 1929. Everyone was in the Market then also. Plus, it was a time of declining Real Estate Values.
Sound familiar?
These flash crashes are the insiders dumping huge positions. Here's the formula:
1. Insiders dump huge blocks of shares.
2. Fed uses taxpayer money to pull up the slack.
3. Everyone thinks it's a technical error.
Yep I believe you're right. Insiders dumping FED jumps in and buys them out.
Today you have earned your diploma. Congratulations you have graduated from the fringe media skool of rediculum. Keep your nose to the grindstone and you'll be shorting bull markets and buying PM apexes with the best of them.
I'm watching the 10-yr. note futures.
If there is any whiff of a potential stock selloff, all I see is the bond futures "flash crash" to the upside in Treasuries.
LOL.....
01 Oct 2010 17:02 BST *DJ CFTC's Gensler: The Public Will Learn 'A Lot More' In Flash Crash Report
01 Oct 2010 17:02 BST *DJ CFTC's Gensler: Report Will Lay Out 'Lessons Learned' From May 6
01 Oct 2010 17:02 BST *DJ CFTC's Gensler Expects Flash Crash Report To Be Released 'Shortly'
01 Oct 2010 17:03 BST *DJ Gensler: CFTC May Need To Address Issues Surrounding Placing Market Orders
01 Oct 2010 17:13 BST *DJ CFTC's Chilton: Algo Trader In Futures Sold 75,000 Contracts On May 6
01 Oct 2010 17:13 BST *DJ CFTC's Chilton: 75,000 Contracts Were Valued At Over $4B
01 Oct 2010 17:14 BST *DJ CFTC's Chilton: Algo Trading Program Caused Markets To Go 'Into Shock'
01 Oct 2010 17:15 BST *DJ CFTC's Chilton: Massive Selling By Algorithm Led To Arbitrage Across Venues
01 Oct 2010 17:23 BST *DJ CFTC, SEC Report: Algo Trader Drove E-Mini Price Down 3% In Four Minutes
(MORE TO FOLLOW) Dow Jones Newswires
The markets have moved from investing and capital formation to cyber warfare by 22 year olds. Markets broken, LOL. Move along nothing to see here.....
Who the fuck is Waddell and Reed?
Located in the heart of the high finance business world...Kansas
http://www.waddell.com/Default.aspx
I think it's hilarious that they would finger some entity located in Kansas, the exact same place where Dorothy's been missing for decades. God forbid they actually point to the various Wizards of OZ on the (wall) street that might also be co-located.
You just can't make this shit up.
Y'all just blew my mind.
The next flash crash will be blamed on an entity somewhere within Area 51 I bet.
Blinding flash of insight! Dorothy is secretly running the NWO, along with the Wicked Witch of the East that faked her own death! Why didn't I ever think of this before?!
LQD is illiquid. It's a liquidity issue. That's the message being sent. Make the middling class mo' po' ... give us the POMO.
This is pure and simple not market induced.There are larger fish in this deal.Look for smoke, and you'll find the fire.
I figure a 10sq mile area,known as Whoretown.
I mean really, guys/gals, HOW much more do you have to do the destabilize our entire sytem?.
100% total Royal FUPS.
When they catch the assA WHOLES responsible for this, they need to be tried for/as enemies of the state.
WOW: the shoeshine boy must be really pissed right now.
Buy gold, silver, and boolits.
Waddell and Reed caused us to lose the war in Afghanistan. Hang em!
Wadell & Reed were on the grassy knoll.
I've met the Waddell and Reed folks on several occasions, specifically the PMs of the fund that was hedging that day. They are good people and have done a great job taking care of their clients' capital over the past 10 years. symbol WASAX. I feel bad for them and hope that this doesnt harm their business. They are some of the good guys.
W&R Evlil Empire shill! Dernial and obfuscation = GUILT
Hang 'em high!
/sarcasm
Waggle and Dogg?
LOL
The SEC is run (for the Crime Syndicate) by the lovely and ever so talented
Mary Shapiro
Give the 'ole Mare a quick lookover on Google. I for one am glad yet another fine friend of Humanity like she has this incredibly sensitive role. I mean just IMAGINE the damage an agent of the dark side could do from inside the SEC...
I'm sure glad that's not the case here.
The price of LQD has not recovered which is different than what happened during the flash crash [market recovered nearly all losses immediately]. Why does this have to be a 'flash crash'. Given the price hasn't recovered, looks more like a forced liquidation to me. Maybe a fund with a large position raising liquidity for 9/30/10 redemptions...
Calling this another 'flash crash' is stretch IMHO...
The term is "Flash Crash", not "Flash Crash and Recovery". Whether it recovers really has nothing to do with it being called a "Flash Crash".
What do you suggest we call a flash crash without a recovery?
Flash Crash on the rocks with a twist?
"Flash Crash and Recovery" is your term, not mine. And yes, the fact that the price did not recover is important. If the priced was forced down due to some unnatural occurrence, it would recover to equilibrium after the intervention, just as the market did during the original flash crash. Algos unnaturally forced market prices down and then they recovered when buyers stepped in as a result of unnaturally low prices.
BTW, I have not yet heard mention about how sales in the ES can affect single names. The flash crash was sparked by single names trading down to $0.01 [JNJ and PG for example]. I don't get how erroneous trades in ES could cause a few single names to trade down to $0.01 while not affecting other stocks.
I agree with everyone here that there is much more to the flash crash story. However, I doubt we will ever get the truth because I doubt the regulators have any clue as to what the real 'truth' is. This WR story is pretty hard to believe, but I'm starting to feel like some of the commentary on this site is a bit alarmist...
reality and i'm waiting
It didn't recover? Have you looked at a chart of LQD? It went down in the $101 range...it is sitting at 112.17 right now off 0.43% on the day. I'd say you need a new chart.
Damn, you're right. I had to recalibrate my system because the canceled trades weren't showing up at first...
We should start a petition to displace incompetent investigators / enforcement division at the SEC.
Holy meltdown. What is going on?
I am a huge fan of ZeroHedge. I have worked in the financial markets for 27 years. I first 14 I worked for a firm that is now constantly hated...it was not the case back then...great firm, great people. I was a fixed income trader...we were very fortunate......we had a who's who client list and dealt with the Fed. Market probabilty was a different game for us...as I have been on my own for almost 10 years...as few years ago, I asked myself the question, "In a dark room, could I see some of the growing algorithmic activity AHEAD of time?" .....and, would it matter? I am a "wash sale" trader, NOT a "mark to market" trader. So, I took a generic algorithm and changed it to constantly calculate the system "stop loss", the current spot price that would generate a change in output (buy or sell signal).....in the SPX, May 5th was a SELL signal, btw........anyway, what I have found is startling........the 'risk dimensions' of all the securities that I look at and trade share the same characteristics during the "impact period"...right before and directly after the "output change".....basically, the market trades at an increasingly higher velocity (price change) as it gets closer to the stop loss level.......let's take the LQD that is currently being talk about....in my system, at the start of today (and you would have known the 'value' at 4:00:00:01 yesterday when your spreadsheet 'rolled down"...the stop would have been 110.65 (on a closing basis). MUCH more importantly, it will be 111.77 tomorrow. These differences make a signnificant difference in daily probability...as I say, "can a normal trader see a 'non-normally distributed' price"....AHEAD of time. Main Point: think of the market as a "see saw" that is constantly seeking 'momentum'...people get longer HIGHER and shorter LOWER...it is critical to know where the market "stop" is......BTW, in the SPX, the system SOLD the market on 8/24 at 1051.87 and BOUGHT the market on 9/13 at 1121.90...I see this over and over. It really matters....best of luck trading......bcat
what a waste of time
This is what happens in a "normal" trading day? Good thing the trading platforms are not being cyber-targeted by international thieves and economic terrorists.
Financial Stability Oversight Council (FSOC) meeting for the first time today, on TV now -- created by Dodd & Frank. Lord help us all.
I forgot, the current stop in the SPX is a close below 1079.20. On Monday, it will be 1079.30. I have also found the 13 day EMA to be critical.....if market position is LONG, and current price is BELOW the 13 day EMA, then be SHORT and vice versa if the market position is SHORT. To give you an idea of how these stops move, on Monday when the SPX closed at 1142.16, the stop was 998.60....that's right, below 1000. As you can see, it has moved up dramatically....completely dependent on the 'roll off' of the inputs. Going back 4 years, there have been 14 BUY signals and 13 SELL signals.....on the 14 BUY signal days, the market has been up 94 bps on average. It was up 183 bps over the prior 3 days and up 201 bos over the prior 5 days. The closing price on the day of the signal was in the top 16% of all prices ( -23 bps off a 141 bps range). The total upside deviation of the day of signal and the high the next day was 171 bps. Main Point....even if someone gives you tomorrow's deviation, you do not know which way! On the SELL side, it is much better: On the day of signal, the market was down 222 bps, down 318 bps over the prior 3 days and -428 over the prior 5 days. the closing price on the day of the signal was in the bottom 14% of the range ( plus 34 bps of a 244 bps range) the Total downsode deviation ( day of signal and low the next day) was minus 364 bps. Question: how did the market close the day AFTER the signal: +0.07 after the SELL signal and +0.13 after the BUY signal. Clearly different in every way than before!
Whatever happened to the russian fellow who worked for Golden Slacks and took the trading program when he left to work for another?
- Sergey Aleynikov, the former Goldman Sachs Group Inc. computer programmer arrested last week for stealing software, told an FBI agent he uploaded proprietary code to an encrypted server he had used on “multiple occasions.”
“The proprietary code, worth millions of dollars, lets the firm do “sophisticated, high-speed and high-volume trades on various stock and commodities markets,” prosecutors said in court documents. Facciponti said a person misusing the code might be able to “manipulate markets.”