An Illustrated Fat Finger In Healthcare Stocks Causes Avalanche Of Broken Trades And Pain For Anyone With A Sub 30% Limit

Tyler Durden's picture

Yesterday we reported that the NYSE was seeking to break a bunch of trades in healthcare related stocks, after an unprecedented surge sent Pfizer up to $90 and Eli Lilly over $60, Abbot Labs to $280, and JNJ to $100. Today, via MarketWatch we learn that this was not a now traditional HFT freak out, but apparently a "brokerage" fat finger. Why a brokerage would be executing in size at 6 pm Eastern, when the market to the best of our knowledge is beyond illiquid, is beyond us. From MarketWatch: "The sharp spikes in dozens of health-care stocks late Monday — trades eventually cancelled by two exchanges — were caused by a brokerage’s bad order on a basket of health-care stocks, said Nasdaq OMX exchange spokesman Frank De Maria. The exchange was not releasing the name of the brokerage, De Maria said by phone Tuesday. Late Monday, Nasdaq said it was cancelling trades in 26 healthcare stocks, and exchange operator Direct Edge decided to cancel trades on 52 stocks that traded more than 30% from their previous print and were executed between 4:57 p.m. and 5:05 p.m. Eastern. Cancelled trades included those of Boston Scientific Corp. , Medtronic Inc. , Aetna Inc. , Bristol-Myers Squibb and Baxter International." That said, if you were short into this flash smash with a stop loss that is 10%, 20% or even 29.99% away from the NBBO, you are fresh out of luck. And let that be a lesson to you: if you carry over a short from one day to the next, and have a sub 30% stop loss limit, you will likely see at least a 30% loss.

And here, courtesy of Nanex is what happened in excruciating detail:

PFE

LLY

JNJ

BMY

BMY

ABT

 

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101 years and counting's picture

"That said, if you were short into this flash smash with a stop loss that is 10%, 20% or even 29.99% away from the NBBO, you are fresh out of luck."

isnt that the point?  operation destroy shorts, while they are away, is working beautifully.

CPL's picture

More like watching them destroy every last retail trader out there.  In today's case.  The longs got it in the ass for a 30% price tag.

God I'm glad my trades last ten minutes maximum and only if the weather looks right.  Only way to trade this slop in the last three years.  Armed to the teeth with a personal HFT to provide signals and a very well trained trigger finger.

 

Can already hear them out there, the longs that is, "steady hands people, steady hands".

 

Mercury's picture

So essentially the exchanges' story is - a tisket a tasket a fatfingered healthcare basket?

I guess the lesson here is that if you fuck up, you better fuck up big or else you won't be granted a "do-over" by the regulatori and will have to open up your own wallet to cover the error. 

How's that for an incentive structure?

cosmictrainwreck's picture

excellent summation.....do-over, bitchez (just not you little bitchez)

Sudden Debt's picture

To bad these spikes only last 2 to 3 minutes... no way I could intercept a trade that fast.

Wouldn't that be a super short plays to catch.

 

 

Gubbmint Cheese's picture

Unfortunately SD.. you and I both know that if we made money on the trade there's a 100% change it would get busted. We are not part of 'that' club. 

Mesquite's picture

>Gubbmint Cheese

Thank you for the post...

Now I know it's not just me that get's screwed regularily..(and not even kissed first..)

No discrimination here, this market 'does' everybody..

(At least now I know I'm not going crazy..)

Be safe all..

Dr o love's picture

you and I both know that if we made money on the trade there's a 100% change it would get busted.

 

Not true.  I had stop limit buy orders for a flash (reverse) crash for SH where I had 3 orders to buy 1000 shares.  One of the 3 orders was busted because it was too far from the criteria.  The other two stood pat for an easy $10,000 overnight.

Commander Cody's picture

And why shouldn't shorts be absolved from the obvious market anomaly as well?  Sounds like lawsuit time to me.

101 years and counting's picture

shorts have been declared terrorists, and therefore, have no rights and can be tortured and shot at will.  lawsuit?  LOL!

 

 

topcallingtroll's picture

Vanguard brokerage has 7.50 limit orders even if you talk to a broker.

bob_dabolina's picture

UBS in a bout of desperation to make some $$$ hired Lenny Dykstra to trade healthcare stocks for them. Nothing else seemed to be working.

He dropped an oversized twizzler on his Bloomberg keypoard causing the twizzler to push on the "B" and the "M" at the same time.

-SEC

shushup's picture

So if you were long they just put you back to where you were before the run and if you were short you get fucked? I think there is a discrimination law suit here for sure.

SheepDog-One's picture

Serves em right, anyone in these stock markets will get what they deserve sooner or later. They want to take your money, and they will get it short now, and longs later.

Alcoholic Native American's picture

Al-Qaeda shoulda hit wall street with a plane.

Verum's picture

OT: looks like the billion prices project is back up for USA

oldmanagain's picture

A stop loss  on a short is a buy stop.  If they cancel all buys this would make the short trader whole again, ie stil short.

Seasmoke's picture

If a stock falls in a forest and no one is around to stop loss, does it make a sound?

TraderTimm's picture

I'm not surprised by anything HFT does anymore. It is the largest alpha-test of automated software in a highly nonlinear environment. One day, like rogue waves, there will be another confluence of hyper-speed trading that will destroy the indexes.

Also, to potentially save your sanity perusing newsfeeds with a certain-leader-of-a-terrorist-group splattered everywhere, try the following:

1) Install the Greasemonkey add-on for firefox found here: https://addons.mozilla.org/en-US/firefox/addon/greasemonkey/

2) Navigate here to download the word-replacement script: http://userscripts.org/scripts/show/79426

3) You may need to close and re-open the browser. Once open, you can right-click on the greasemonkey-head icon, select User Script Commands ---> Add words.

4) After you add them with the '+' click 'Done'

5) Laugh and laugh as your formerly loathed persons, terms, etc.. become filtered realtime and replaced as "stupid retard" and so on.

Works great for trolls on forums as well :)

 

blunderdog's picture

I replaced OBL with Ben Bernanke.

Is that so wrong?

Alex Kintner's picture

Technically both Terraists. They just have different tactics.

rsi1's picture

bah, this was after hours, barely anyone executes stop losses in after hours because of liqudiity. its stupid to put stop loss valid for a.hours. an expensive lesson for some..

scratch_and_sniff's picture

Moral of story - stops are for suckers unless they are uber tight to lock in gains.

rsi1's picture

when you show a chart, its good to show the volume that was executed, it seems like these were bad trades due to a fat finger, maybe they should not be cancelled, but the volume is tiny!!!! you convinently forgot to mention this is a non event considering the volume is miserably small.

Tyler Durden's picture

Presenting miserably small volume:

;tc|BEGINSTREAM|20110502|
;tc|NxTime|Symbol|Listed Exg|CorrectionType|OrgSeq|OrgPrice|OrgSize|
18:33:27|eABT|NYSE|Cancel;Busted;|1261842|73.00000|200|
18:33:27|eABT|NYSE|Cancel;Busted;|1261843|75.00000|100|
18:33:27|eABT|NYSE|Cancel;Busted;|1261844|80.00000|100|
18:33:27|eABT|NYSE|Cancel;Busted;|1261845|80.00000|312|
18:33:27|eABT|NYSE|Cancel;Busted;|1261846|85.00000|100|
18:33:27|eABT|NYSE|Cancel;Busted;|1261847|278.03000|393|
18:35:40|eBMY|NYSE|Cancel;Busted;|1268743|39.00000|300|
18:35:40|eBMY|NYSE|Cancel;Busted;|1268744|39.20000|200|
18:35:40|eBMY|NYSE|Cancel;Busted;|1268745|40.00000|200|
18:35:40|eBMY|NYSE|Cancel;Busted;|1268757|41.00000|151|
18:35:40|eBMY|NYSE|Cancel;Busted;|1268760|41.75000|200|
18:35:40|eBMY|NYSE|Cancel;Busted;|1268761|41.75000|5300|
18:35:40|eBMY|NYSE|Cancel;Busted;|1268762|45.00000|3000|
18:36:02|eDVA|NYSE|Cancel;Busted;|1444287|130.00000|100|
18:36:21|eBSX|NYSE|Cancel;Busted;|1268742|11.25000|150|
18:36:21|eBSX|NYSE|Cancel;Busted;|1268746|11.37000|500|
18:36:21|eBSX|NYSE|Cancel;Busted;|1268747|11.90000|580|
18:36:22|eBSX|NYSE|Cancel;Busted;|1268748|11.90000|390|
18:36:22|eBSX|NYSE|Cancel;Busted;|1268749|15.00000|500|
18:36:22|eBSX|NYSE|Cancel;Busted;|1268750|15.00000|100|
18:36:22|eBSX|NYSE|Cancel;Busted;|1268753|18.60000|500|
18:36:22|eBSX|NYSE|Cancel;Busted;|1268754|20.00000|800|
18:36:22|eBSX|NYSE|Cancel;Busted;|1268755|24.34000|100|
18:36:22|eBSX|NYSE|Cancel;Busted;|1268756|28.85000|266|
18:36:22|eBSX|NYSE|Cancel;Busted;|1268758|28.88000|600|
18:36:22|eBSX|NYSE|Cancel;Busted;|1268759|28.95000|122|
18:37:11|eCAH|NYSE|Cancel;Busted;|1268614|70.00000|135|
18:37:51|eGILD|NQNM|Cancel;Busted;|1396515|53.52000|117|
18:37:51|eGILD|NQNM|Cancel;Busted;|1396516|54.61000|500|
18:37:51|eGILD|NQNM|Cancel;Busted;|1396517|55.00000|1000|
18:37:51|eGILD|NQNM|Cancel;Busted;|1396518|56.00000|106|
18:37:51|eGILD|NQNM|Cancel;Busted;|1396519|58.20000|200|
18:37:51|eGILD|NQNM|Cancel;Busted;|1396521|59.00000|104|
18:37:51|eGILD|NQNM|Cancel;Busted;|1396522|62.50000|200|
18:37:51|eGILD|NQNM|Cancel;Busted;|1396523|65.00000|100|
18:37:51|eGILD|NQNM|Cancel;Busted;|1396524|65.00000|100|
18:37:51|eGILD|NQNM|Cancel;Busted;|1396525|69.00000|100|
18:37:51|eGILD|NQNM|Cancel;Busted;|1396526|69.99000|5515|
18:37:52|eMDT|NYSE|Cancel;Busted;|1401008|55.50000|135|
18:37:52|eMDT|NYSE|Cancel;Busted;|1401014|65.00000|100|
18:37:55|eCELG|NQNM|Cancel;Busted;|1183956|80.00000|140|
18:37:55|eCELG|NQNM|Cancel;Busted;|1183957|93.46000|1000|
18:37:55|eCELG|NQNM|Cancel;Busted;|1183958|93.46000|500|
18:37:55|eCELG|NQNM|Cancel;Busted;|1183959|95.00000|100|
18:37:55|eCELG|NQNM|Cancel;Busted;|1183994|79.00000|100|
18:39:30|eJNJ|NYSE|Cancel;Busted;|1383353|87.00000|100|
18:39:30|eJNJ|NYSE|Cancel;Busted;|1383354|90.00000|400|
18:39:30|eJNJ|NYSE|Cancel;Busted;|1383355|94.00000|200|
18:39:30|eJNJ|NYSE|Cancel;Busted;|1383356|99.00000|100|
18:39:30|eJNJ|NYSE|Cancel;Busted;|1383357|100.00000|100|
18:39:44|eZMH|NYSE|Cancel;Busted;|1286718|86.00000|110|
18:40:32|eMHS|NYSE|Cancel;Busted;|1401024|100.00000|100|
18:41:35|eLLY|NYSE|Cancel;Busted;|1401035|57.37000|100|
18:41:35|eLLY|NYSE|Cancel;Busted;|1401036|65.00000|500|
18:44:44|eMRK|NYSE|Cancel;Busted;|1237169|48.00000|186|
18:44:44|eMRK|NYSE|Cancel;Busted;|1237170|50.00000|100|
18:44:44|eMRK|NYSE|Cancel;Busted;|1237171|50.00000|100|
18:44:44|eMRK|NYSE|Cancel;Busted;|1237172|50.00000|781|
18:44:44|eMRK|NYSE|Cancel;Busted;|1237173|51.30000|206|
18:44:44|eMRK|NYSE|Cancel;Busted;|1237174|55.00000|100|
18:44:44|eMRK|NYSE|Cancel;Busted;|1237175|59.97000|1400|
18:44:44|eMRK|NYSE|Cancel;Busted;|1237176|60.00000|100|
18:44:44|eMRK|NYSE|Cancel;Busted;|1237177|60.00000|265|
18:44:44|eMRK|NYSE|Cancel;Busted;|1237178|60.00000|200|
18:44:44|eMRK|NYSE|Cancel;Busted;|1237179|64.00000|250|
18:45:22|eMYL|NQNM|Cancel;Busted;|1454212|58.75000|225|
18:46:17|ePFE|NYSE|Cancel;Busted;|1392581|27.60000|800|
18:46:17|ePFE|NYSE|Cancel;Busted;|1392582|27.77000|300|
18:46:17|ePFE|NYSE|Cancel;Busted;|1392583|28.00000|200|
18:46:17|ePFE|NYSE|Cancel;Busted;|1392584|28.00000|160|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392585|28.00000|160|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392586|28.00000|600|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392587|28.06000|500|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392588|28.10000|200|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392589|28.50000|104|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392590|29.00000|600|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392591|29.70000|150|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392592|29.75000|100|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392593|29.94000|100|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392594|29.99000|150|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392595|30.00000|470|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392596|30.00000|6500|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392597|30.00000|200|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392598|30.00000|200|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392599|30.00000|300|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392600|30.00000|100|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392601|30.00000|100|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392602|30.00000|1000|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392603|30.00000|500|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392604|30.00000|1200|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392605|30.50000|900|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392606|30.99000|273|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392607|31.17000|100|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392608|31.99000|200|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392609|32.00000|100|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392610|32.00000|100|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392611|33.90000|175|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392612|34.15000|1000|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392613|35.00000|200|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392614|35.00000|100|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392615|35.00000|200|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392616|36.00000|350|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392617|36.00000|200|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392618|36.68000|100|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392619|37.00000|150|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392620|37.77000|550|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392621|37.80000|400|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392622|39.00000|800|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392623|40.00000|100|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392624|40.00000|700|
18:46:18|ePFE|NYSE|Cancel;Busted;|1392625|40.00000|206|
18:46:19|ePFE|NYSE|Cancel;Busted;|1392626|45.00000|231|
18:46:19|ePFE|NYSE|Cancel;Busted;|1392627|49.25000|1500|
18:46:19|ePFE|NYSE|Cancel;Busted;|1392628|50.00000|610|
18:46:19|ePFE|NYSE|Cancel;Busted;|1392629|88.71000|559|
18:46:19|eCSMA|PACF|Cancel;Busted;|228953|21.02000|89500|
18:47:45|eSYK|NYSE|Cancel;Busted;|1278272|80.00000|400|
18:49:15|eVAR|NYSE|Cancel;Busted;|1286711|95.00000|1560|
19:05:18|eAGN|NYSE|Cancel;Busted;|1261786|111.16000|600|
19:05:30|eAGN|NYSE|Cancel;Busted;|1261784|104.72000|400|
19:15:52|eKOF|NYSE|Cancel;Busted;|1404176|79.46350|1288|
19:15:53|eELP|NYSE|Cancel;Busted;|1448074|27.58330|5400|
19:15:53|eSCCO|NYSE|Cancel;Busted;|1188539|36.69270|47632|
19:15:53|eSQM|NYSE|Cancel;Busted;|1188540|60.53870|4100|
19:15:53|eCCU|NYSE|Cancel;Busted;|1284561|59.99400|430|
19:15:53|eCPL|NYSE|Cancel;Busted;|1284562|89.46920|2300|
19:15:53|eEBR.B|NYSE|Cancel;Busted;|1448073|18.28520|1100|
19:15:53|eEBR|NYSE|Cancel;Busted;|1448072|14.53470|16200|
19:15:59|eKOF|NYSE|Cancel;Busted;|1404177|79.46350|1288|
19:15:59|eELP|NYSE|Cancel;Busted;|1448077|27.58330|5400|
19:15:59|eSQM|NYSE|Cancel;Busted;|1188542|60.53870|4100|
19:15:59|eSCCO|NYSE|Cancel;Busted;|1188541|36.69270|47632|
19:15:59|eCPL|NYSE|Cancel;Busted;|1284564|89.46920|2300|
19:15:59|eCCU|NYSE|Cancel;Busted;|1284563|59.99400|430|
19:15:59|eEBR.B|NYSE|Cancel;Busted;|1448076|18.28520|1100|
19:15:59|eEBR|NYSE|Cancel;Busted;|1448075|14.53470|16200|
19:22:38|eBSX|NYSE|Cancel;Busted;|1268751|15.24000|220|
19:22:38|eBSX|NYSE|Cancel;Busted;|1268752|16.48000|180|
19:23:39|eCEPH|NQNM|Cancel;Busted;|1183941|81.10000|100|
19:24:57|eFRX|NYSE|Cancel;Busted;|1232423|49.22000|100|
19:24:57|eFRX|NYSE|Cancel;Busted;|1232424|55.22000|100|
19:24:57|eFRX|NYSE|Cancel;Busted;|1232425|59.22000|100|
19:24:57|eFRX|NYSE|Cancel;Busted;|1232426|65.22000|100|
19:24:57|eFRX|NYSE|Cancel;Busted;|1232427|69.22000|100|
19:24:58|eFRX|NYSE|Cancel;Busted;|1232428|75.22000|100|
19:26:48|eMHS|NYSE|Cancel;Busted;|1401021|88.54000|400|

Zero Govt's picture

how long to type that TD ?

CPL's picture

No shit on the miser trades...un-fucking-believable that they get to shark like that after hours.

Cdad's picture

This is absolute bullshit.  The answer is given because the truth is less encouraging.  The fractured markets are out of control.  And as the case was in the summer of 2007, and again in the fall of 2009, these prints presage a period of volatility to come.  

As suggested in the article, shorts were taken out and new shorts established at higher levels.  As for trades being cancelled, I would believe that like I believe everything else the exchanges say.  Duncan Niederauer lies for a living.

Hedge fund wars, bitchez!

willien1derland's picture

Totally agree! What a load of sh!t-once again Wall street gets away with fraud - what I find hilarious is that the NYSE would waste their time preparing a statement that is as fictional as Harry Potter-May God save us from our Government

Cursive's picture

I have a lot of trades I'd like to cancel, but I'm not connected.

tallen's picture

So much for free markets. If your retarded enough to set a market order for a humongous amount of shares when the volume is light, what do you expect to happen.

ThirdCoastSurfer's picture

The real fun starts soon after Citi "splits" on Friday! 

Goodbye liquidity bonuses, goodbye 500 million daily shares trade commissions.

If you think the sharks are frenzied now, read this: 

"The floor broker earns a fixed commission on the trade and the upstairs desk gets the liquidity rebate from the exchange."

http://www.tradersmagazine.com/news/citi-cuttone-trading-107454-1.html?zkPrintable=true

No one with a stop will be safe!

Zero Govt's picture


Fat Finger In Healthcare Stocks Causes Avalanche

You mean the Kiss of Death of CNBC surely who tipped the Healthcare sector today as a fab performer

..last week it was Jim Cramer urging investors to "Buy Buy Buy" Silver and we know how that turned out!!

mkkby's picture

The only reason I ever traded was because I was relatively protected by tight stops.  This is so broken I don't know why anyone plays in their sandbox.

AgShaman's picture

Haha. Whenever the "Fat Finger" comes back around...I can't help but think about Lenny (John Malkovich) in "Of Mice and Men" explaining to Gary Sinise how he was just "Pettin' the rabbit with the fingers"....while the bunny lays dead in his hands. Funny shyt.

gwar5's picture

The Ectomorphically Challenged Digit strikes again.

boooyaaaah's picture
Chapter 2 at DeepCapture  
 

Posted on 03 May 2011 by Mark Mitchell  

Papasmurf's picture

If  fat finger paid $90 for PFE, fatfinger deserves to pay $90 for PFE.  That would end the fat fingerfucking  of the markets.

insidious's picture

I don't really get it (except to the extent that they are intentionally screwing people). If its a mistake and the exchange is going to break some of the trades why don't they just break all of them which occured during the specified period and on the stocks in question?