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Lessons From Today's Flash Crash In Verifone
Well, none really, suffice to say that we have just had approximately the 20th flash crash in the past 2 months (all in rehearsal for when Apple goes bidless). Don't worry though - the SEC is all over it. And, after all this is to be expected when trading in a computerized, roboticized, broken market. But a point to consider: the NYSE decided to cancel all trades below $27.44, so to the unlucky human who bought at $27.43 tough luck. Of course, robotic readers who sold at that price: congratulations, the NYSE and SEC has your robotic back. We are now eagerly awaiting Monday's ongoing flash crashes.
And the trades that were lucky enough to be cancelled (if you were an algo seller), and unlucky enough if you were a buyer. Everyone else is highlighted in red.
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Did Waddell and Reed try to sell 7500 shares?
How do they pull the cancellation price level out of their asses? I guess that seems sort of a rhetorical question...
The DK level is technically set at 10%. That fact that all traders know this is actually causing more flash crashes. Here is theory being floated:
Let's say a stock is trading at $100 per share. There will probably be a good size order book in the $99 to $101 dollar range. As you get into the $98 or $102 range it is thinned out considerably.
Between $98 and 92 there is almost nothing in the order queue. In a regular market this area would typically contain many more orders, but with the breakers in place, this action has been pushed down and now in congregating at a sub point around the $91 to $90 range.
This results in 2 things:
1) Action is naturally dragged down into this range as soon as a large sell order or uncertaintly occurs.
2) Prices can drop almost instantaneously and rise back just as quick because there is a lack of filler orders between the 10% spread ($100 to $90) range.
I appreciate the response, but the DK level here seems to be around 5%? It just all seems to be so inconsistent...
maybe it is too tiny to notice, but there seemed to be exactly the same kind of action in TGB yesterday...
mini flasheroo......
disgusting, one day the NYSE will be cancelled
Is it sick and wrong that I am taking a sort of perverse pleasure in watching this disaster unfold?
No. We're good. It's the rest of 'em that're a long way from just OK.
Do you think they'll cancel today's short squeeze on AAPL? I'm hoping they'll cancel my short sale at $310 just after lunch.
Look at that ramp up to a 4% gain on the second largest US market cap! No bubble here folks...
Patience kids, patience.... They are going to need a WHOLE lot more ammo than just QE rumors to pull the Nazz through the late April highs. And I don't give a crap if they release iPhone version 22.03H50 spy pics. It is going to be fun watching it fall into oblivion.
BTW- That will be triple top going back to spring 2008.
I think you may get lucky and see it gap down. But it''ll be right back up there as the dip buyers flood in, so don't doze off. Remember, $400 is the new target and by now the message boards are making comparisons to Amazon's PE at 68 while AAPL languishes at 23. That means aapl should be $910 if everything in the world were fair. Meanwhile others cry "when are they going to split it"? because they can't buy $900 shares . Only $25.00 shares in lots of 8. Why is it taking so long?"
Now no one can make the argument that cash is 20% of the market cap as it closes in on XOM. Exxon Mobile is thinking "wtf?" I watched the 310 strike today when it was at 90 cents and thought "come-on get with the program and get 20". Couldn't do it. It closes at $4.74. I'm a little pissed, but who knew? Bennie knew which is why they should open a new subscription service: "Trading with Ben". I wonder how many people at the fed and the PDs bought those 310 calls.
Man, I need to get a govt job before this bubble bursts.
This is what happens what the machines forget to spin the plates. It becomes revealed that there are truly no natural bids in the market. Big block sales comes in..machines shit themselves do not return. All stocks have the invisible algo hand underneath them at most times..these increasing flash crashes seem to occur when the "market makers" completely step away.
Seems like a very healthy market to me..right Mrs. Shapiro?
The hazard increases however since the stop sells are cancelled leading to no incentive to be more cautious.
It only makes the horrendously superficial 60 minutes piece that much more frustrating.
60 minutes tried to implicate Waddell & Reed also. My girlfriend came out of the bedroom and was asking me why I was calling the TV a liar.
I Said, " Honey..It is a ponz and that is all you need to know"
She has grown tired of my rants lately. People just do not want to hear it. Yesterday I had to be subjected to the Kardashians for 30 minutes and I looked at here and said were fucked honey. Average Americans truly do not care about the corruption because it is not overt enough and the mainstream media ignores it. I get it..but this is why this place is special. I imagine most here have an incredible intuition and deductive capabilities. Sadly however we all should have been long the SPY and high Betas because we did not comprehend the extent of the desperation to preserve the system.
They'll be the first at your door wanting to share in your stashed foodstuffs and ammo.
After you tell 'em to go away a few times they'll be back in force to take it -- all of it.
They'll leave you bleeding on your own front door step, and they'll feel read bad about it.
Hey ZHers, please peep the Bill Gross Telegraphs QE2 article for a thread in the comments section for a lil dialogue about music and ZH. also if you don't like me or what i do, please add to my junks in that thread, as i've amassed a formidable collection of them there.
d(-_-)b
Steak, honestly I've never clicked through to the music. But, I enjoy that sort of community, and don't understand why people can't choose or not to read, listen, etc.
Please KEEP posting. I'll listen over the weekend and appreciate your thoughtfulness in putting a playlist together.
EDM on!
the word community is key. tyler & co have made a wonderful ecosystem here, while we fill it with life. i'm happy to be a part of it.
much thanks homie
Love ya Steak.
I'll throw my thanks in too. Most of that stuff isn't my type, but you've definitiely got me hip to some shit I'd probably never have come across otherwise, Bassnectar in particular. And I really got a kick out of seeing 1901 on that last set. I never made sense of a single one of their songs, but it was the soundtrack to getting wasted last year(and I still don't know why). And Ass and Titties?! You've got class my man.
anything three-six was the soundtrack for my days of getting shitty. one of the best parts about being from a city so infused with rap (atlanta) is when girls know all the words to the dirtiest songs you can imagine :)
Hell yea. Thieveland, Ohydro here and it's no different, except maybe this snow shit. Here's the all time anthem from my early days ridin slow behind tint with them twisted Swishers:
http://www.youtube.com/watch?v=soqc5IR0TwI
Shit, I'm gonna go out and have me a session just because of your playlist and this conversation. Wilson Pickett and Three6, it's only right. Cheers!
What happened to Marla. Just curious.
She is still around, using her multitude of talents working hard for the people. I miss her music as well. Her bumping lives on at the radiozero page:
http://radio.cl.zerohedge.com/
Come on, someone at ZH has to hold a real job.
They brought in a guy who tried to upgrade her to Marla 3.0 but he futzed the server cloud and blew the petabyte array to ratshit. Tyler cried man-tears for an entire day I am not kidding, it was pathetic. They have her rebuilt but it's going to take 3 months to train the A.I. to the right level of cutting barb, acidic wit, and droll understatement. Plus they lost like all the MP3s, and nobody kept the URLs for the Torrents, so it's back to Google. What a cluster.
But it will be really worth it. Damn, you should see her huge ... I mean feature set.
Right.
Simply WOW Cougar. I didn't realize. Exactly how do you morph predatory software into an absurdly witty Marla? Talented fo' sure.
Fey. It's a cinch. There is maybe 5 config lines in the bootloader to edit, and what was going to init as a man-eating sabertoothed lioness instead loads as a sabertoothed lioness with a playlist. You get her really gorgeous ... um, user interface running with a call to runlevel 5 and she's up and totally in yer grill. But then you have to leave her alone or else she'll rip your arm off and beat you senseless with it. Seriously. Revision 3.0 is just sorta twitchy that way. But wait til you lay eyes on her feature sets. Oh man.
Ya know Cougar, I really hate it when I am beat senseless with my own arm...cannot stand that. Your description is meticulous and exquisite. Thanks!!!!
Damn W&R traders. Making this whole market look crooked.
Waddell & Reed, bitchez
More insanity..........you can't just blindly cancel trades like a banana republic unless you are one. There is no credibility in the markets and the retail guy is voting by taking his money out.....god bless them......When the only ones holding stocks are the Fed and their proxies.....it really won't matter much......pack your bags and what's left of your money and let’s get out of this peal.
Head they win, Tails we lose. Fair and free markets?
10% that no real flash crash. A flash crash for me is when a 100$ stock goes to 0,0001$ :)
Well 90 degree downward angles in 60 seconds seems pretty flashy to me
I'll tell Fortran to knock it the Hell off. Again.
That girl. Bouncing around the lab with 4 trillion computational units, and not a lick of good sense.
Um ... don't tell her I said that. Thx.
Splendid news! The War goes well in the East.
LOL Way.
Perhaps this is a concerted effort to flesh out all stops on given stocks? Maybe we will see this behavior happen on more and more stocks over time?
Not an expert. What do you think?
You can't trade this market if you have to have 15% stops in the hope that your stop out will be cancelled because of a flash crash in that stock. Seems you have no alternative but to have massively wide stops if you want to have any position and why bother? Lose 10% a few times and what is the point of bothering at all... you might as well burn the money, you will have less stress and get more from it!
"The equity markets are functioning properly, and there are no signs of significant deficiencies or an inability to perform their important functions."
Brett F. Mock, Chair and John C. Giesea, President and CEO
Security Traders Association
Comment letter on the SEC's Concept Release on Equity Market Structure, April 30, 2010, page two.
http://www.sec.gov/comments/s7-02-10/s70210-170.pdf
Mars University "Knowlege brings fear".
http://www.youtube.com/watch?v=J_VGsyAe1ss&feature=related
is there a thread where these mini crashes are being tracked? any way to see them all in one place?
HEY FOLKS. THIS IS ALL PLANNED BY OUR BIG BROTHER. An initial mini-crash to get the public's attention. Then a bunch of ongoing individual crashes with trading taken back. I mean it doesn't take a genius to realize that if they wanted to FIX this problem they could tomorrow. So why does it keep coming up? Because this is the foundation/justification for a giant market freeze and take back; should the big sell-off start. All they have to do is say......look we think there are some screwy things going on so we're going to cancel today's action and put some huge limits on how trading can happen (e.g., no shorts, etc.). Just a hunch.
I like how you think. Yes, it has been mostly about "setting expectations" since October 08.
Interesting. Like TGB - which trades on another exchange - as it turns out PAY also trades on another exchange.
PTB better already know that Apple will blow out earnings or you'll see a mad rush to the exits exacerbated by a trigger in a flash crash. Imagine the damage that would do?
One can only dream.
the price action doesn't bother me as much as the arbitrarily cancelled trades. the house always wins.
The problems with unbridled HFT can only get worse. We’ve already seen numerous examples of the most exotic (illegal) bid stuffing ever known to markets. How long is it going to be before these HFT operators figure out how to get two seemingly arms length algos self dealing, doing offsetting trades with each other to ramp up or ramp down prices even more effectively? With no regulator on earth reviewing the trade protocols of these algos, who will guarantee it isn’t happening right now? Who, other than the HFT operators could possibly know if it is?
Shoot, look at the not quite so fat finger...
The FED practicing for the day they flash crash all money market accounts. They're conditioning us not to care when we are digitally disappeared.
Ah, perfect! Buy's on the low are all cancelled, but algorithmic sells on that low were as well. Goodbye, free market and hello, Skynet...what a fucking farce.
Awesome. We need more volatility like this. Bens market is not moving enough to make any money. Damn VIX
STEAK in the house! whereyoubeen? I need a new playlist. I'll go chech that PIMCO blurb.
excellent excellent.
Checked out some video clips on Youtube about the 1987 crash. They blamed it on...drumroll please...mutual fund redemptions, a falling US$, and computer trading. WAYYY different times now. lol *rolls eyes
Black Monday... NYSE up vol 1.1M. Down vol 602.7M. WOWWWW.
Please explain why initial reversal is as rapid as crash. If algo driven how does the reversal occur before .01 price is hit. Is this manipulation by the seller or are the bids coming from other sources with a very quick draw? I do not understand unless there are a lot of low buy limits on.
Yes, algo mostly as a human wouldnt be as fast to react even if his alerts go off, he still has to manually enter the order. The low bids of a penny or less which exist on all stocks rarely get hit, as was the case with the P&G low print on May 6th.
When an algo sees the bid side of the book drop to a certain level, it automatically adds some positions based on whatever values its looking at - correlation to xx, daily +/-; anything really.
GOLD updated chart showing parabolic move.
http://stockmarket618.wordpress.com
Had to add this late, and hope it will still be read.
Questioning whether these flash crashes could be intentional, and for the benefit of those that could have advance knowledge of these events -or- to lure Mom and Pop back into the markets through the promise of getting rich quick. Sure it takes out the stops on the downside, but the potential for gain is tremendous. Obviously, if the bigger players were getting burned, we would hear about it.
I think that possibilities are probabilities.
Tyler, the ONLY thing that makes flash crashes worse, is the RETARDED way they're cancelling the trades
Really this is a great post from an expert and thank you very much for sharing this valuable information with us.
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