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No, It's Not The Nat Gas "Fractal" Algo: Nanex Discloses The Very Ominous Implications Of Today's Berserk Crude Algo

Tyler Durden's picture


After we reported about the aberrant Crude Oil Futures algo earlier, we asked out friends at Nanex to take a closer look. What they discovered is something far more disturbing than merely another iteration of the confused "fractal" algo seen previously trading Natural Gas.

In essence, the odd trading pattern in CL was not isolated, but worked in tandem and in seemingly perfect arbitrage with events in the key crude-related ETFs: USO, UCO and SCO.

In Nanex' words:

What appears to be a massive arbitrage algorithm involving the NYMEX Crude
Oil futures (CL) and ETF symbols USO, UCO, and SCO, began executing at
13:35:43.850 and ended about 5 seconds later. The August futures contract (CL
Q11) cleared out both sides of the depth of book 4 times.

At first sight, the oscillations in the CL future appear somewhat similar to
the oscillations from another algorithm involving
natural gas on June 8,
. However, on closer inspection, this is something entirely

And for all those who are convinced that it was not merely HFT that caused the May 6 flash crash, but a tandem sell-off between futures and correlated ETFs, here is the sobering conclusion as to why absolutely nothing has changed since the Flash Crash.

This is an event that regulators need to spend time taking apart and analyzing
in detail. It will be well worth it, because there are similarities with
algorithms that cause disturbances in the equity market via arbitrage between
the S&P future and the equity ETFs SPY, IWM, QQQ, etc (one of those
disturbances resulted in the "flash crash"). Someone has a distinct
speed advantage and is taking full advantage of it.

In other words, the very same actors are still engaging in all the same manipulative activities that caused the biggest (if very short lived) market drop in history are still here, however they are now trading other products, which as is well-known the administration has a keen interest in seeing plunge in price.

For the conspiracy theorists out there, recall the events surrounding the market crash and the exigency to pass circumstantial legislation that both prevented an audit of the Fed, and to encourage Europe to bail out Greece for the first time. In other words, keeping with the conspiratorial bent, if the SEC does not pursue the perpetrator of this trading pattern, who very well may have been the same one to crash the stock market back in May of 2010, at least we will know why. Oh, and don't be surprised to see the equity flash crash transposed to other politically convenient products when so required (preferably before key political events that require the consumer to suddenly feel wealthy). Such as crude... and of course precious metals (which incidentally reminds us: has anyone found who caused that massive crash in silver on May 1 which marked the top in the silver market? We didn't think so).

Some visual evidence courtesy of Nanex:

Zoom in, Price Only:











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Thu, 07/07/2011 - 17:08 | 1434118 Superslam
Superslam's picture

Fractal fracking, bitchez! Oh wait...crude oil? Um...never mind.

Thu, 07/07/2011 - 18:16 | 1434346 Contura
Contura's picture

The bottom one looks like the dog in Dire Straits "money for nothing" MTV-video from the 80´s....

Thu, 07/07/2011 - 21:09 | 1434690 tom a taxpayer
Fri, 07/08/2011 - 01:19 | 1435140 Fish Gone Bad
Fish Gone Bad's picture

If you have (inside) information, and trade on it one week in advance, it is insider trading. 

If you trade on it, 1 day in advance, it is insider trading.

If you trade on it, 1 hour in advance, it is insider trading.

If you trade on it, 1 second in advance, it is high frequency trading.

Fri, 07/08/2011 - 01:30 | 1435152 Ahmeexnal
Ahmeexnal's picture

JPig will use the algos to bring silver price down so they can cover their shorts.

As soon as they do, they will go long and you know the rest of the story.


Thu, 07/07/2011 - 17:07 | 1434122 gjervis
gjervis's picture

lets just plank

Thu, 07/07/2011 - 17:07 | 1434123 nope-1004
nope-1004's picture

Bankster whores.  No conscience, no morality, just white-collar crime.


Thu, 07/07/2011 - 17:57 | 1434302 Saxxon
Saxxon's picture

It's ok; I'm out.  These electronic markets are simply infected with RAGE and will have to burn themselves out fighting with one another.

Thu, 07/07/2011 - 18:03 | 1434314 LeBalance
LeBalance's picture

you are not out.  you live in the impact zone.  :)

Thu, 07/07/2011 - 21:58 | 1434745 Goldilocks
Goldilocks's picture

Do you mean financial impact? … & / or something else …

Imagine the aftermath of nuclear bomb sabotage (like Fukushima) at one of USA’s massive semi spent nuclear material garbage dumps / holding facilities.

USAs handler’s seem to have had a love affair with creating / collecting gargantuan piles of extremely lethal poisons … despite a plethora of better technologies & ideas. (they have been forward thinking indeed & going long the apocalypse)

& Now that the potential dooms-day-devices (the world’s biggest dirty bombs) are in place … we’ll concede to anything. As for our (USA’s) sovereignty, what the hell good is that, when we have massive bombs parked up our collective asses?

</sarc on> Now get back to work, pay taxes, & tow the line … or else, booom. </sarc off>

No place to run to … no place to hide. (less those planning on leaving planet earth via spaceship, stargate, or whatever …they might say, “go on, you’re special”, but more likely,  you will be “the special”, food that is)(sorry about the austerity / harshness of this message)

Back to reality … Perhaps those ghost cities & such in China have a purpose, after all.

</sarc on> Long live the dollar! USA!… USA!….USA!… </sarc off>

Ohh yah, one more thing… one wrong move & the country gets it. Do what he say, do what he say … (black humor, I know … sorry about that too!)(why did I even bother posting ;-)

Fri, 07/08/2011 - 01:57 | 1435179 Oh regional Indian
Oh regional Indian's picture

Nice riff, good change of pace there Goldi. :-)


Thu, 07/07/2011 - 19:00 | 1434425 SubjectivObject
SubjectivObject's picture

Pimps ..... bankster pimps .... the real monsters.

Thu, 07/07/2011 - 17:09 | 1434140 DaddyO
DaddyO's picture


Great Art Work!


Thu, 07/07/2011 - 17:10 | 1434142 ThoughtCriminal
ThoughtCriminal's picture

Cubist algos ... Suprematism algos ...

Thu, 07/07/2011 - 17:21 | 1434196 wandstrasse
wandstrasse's picture

abstract expressionism, the last three could be from the great Clyfford Still:

Thu, 07/07/2011 - 17:32 | 1434235 Miss Expectations
Miss Expectations's picture

This whole thread makes me feel all twombly..

Thu, 07/07/2011 - 17:41 | 1434264 wandstrasse
wandstrasse's picture

Twombly passed away recently. I made an extra unconscious doodle during a phone call in memoriam.

Fri, 07/08/2011 - 05:29 | 1435342 Jacks Creation
Jacks Creation's picture

Who on earth would flag that as junk? Some disgruntled hyper-realist? Wtf.

Thu, 07/07/2011 - 17:10 | 1434145 jm
jm's picture

So what the hell... stay out of indexes and liquid trades?

Thu, 07/07/2011 - 17:16 | 1434167 hambone
hambone's picture

More generally, avoid earth and mankind.

Thu, 07/07/2011 - 17:25 | 1434205 wandstrasse
wandstrasse's picture

transform into a sycophant. that is what I did.

Thu, 07/07/2011 - 17:33 | 1434237 ebworthen
ebworthen's picture

Or an angrily alcoholic hermitic luddite misanthrope.

Thu, 07/07/2011 - 17:38 | 1434250 hambone
hambone's picture


Thu, 07/07/2011 - 17:57 | 1434301 Troublehoff
Troublehoff's picture

i'd love to


but unfortunately, there is this thing called 'money' that i seem to perpetually need for essentials such as food, shelter and the purchase of mothers day cards etc...

for that reason, I am forced to work in a job, I'd prefer not to do and socialise with people I would otherwise avoid

...and i'm one of the 'lucky' ones

oh the humanity!

Thu, 07/07/2011 - 18:52 | 1434408 CrazyCooter
CrazyCooter's picture

This is as good a place as any to toss out my random $.02.

Some quick background before I shoot my mouth off. My first job out of college was writing "productivity tools" for semi-conductor mask layout. I went on to work in semi-conductor manufacturing. Most of the last 15 years of my life, I have written software of some variation or another, spanning multiple platforms, languages, and problem spaces/industries. I am sure that all sounds like Greek, just like some ZH posts I earnestly try to digest but just don't get (like those charts above - I just stare and feel dumb).

I love what I do and I am blessed to be able to move around as much as I have (i.e. going from semi-conductor to telecom to reservation systems to insurance to ... you get the idea). This "travel" has given me very unique perspectives on many things. My point is that I think I have a damn good fundamental understanding of "information technology" or "humanities ability to process information as a society". I want to share something, which may or may not augment this post/thread:

Technology is a tool. It is neither good, nor is it evil. It is men who are good or evil.

What I fear is present here is a group of men/women who are developing warfare systems, without realizing this is what they are doing. These tools are for rape and pillage. But there is no code of honor here. There is no concern for collatoral dammag. I think the scope of what is being allowed, due to regulatory capture, is far more insidious.

Let me digress once more ...

There have been a couple times in my life when I whacked the <ENTER> key and was shortly filled with dread. The metal taste in your mouth, bowling ball in your stomach kind of dread. The kind of feeling you get when you KNOW you just fscked up bad or that bad things are imminent. Real bad things. Cost the company lots of money bad. In all cases, I was able to recover (and not get my ass fired). I have since developed a distinct habit of being quite paranoid and thoughtful when making changes to live software systems.

Along those same lines, how many gun owners will admit to accidentially discharging a weapon? I have. I did it once. I was at a range, pointed down, but I was used to lever action (I was young) and it was my first semi automatic. I lowered the barrel of the 30-06 after making my first shot and discharged into the ground teen feet in front of me. None of the men present said a thing; they must have seen my face (I knew gun safety basics). But it was that same feeling; I could have killed someone.

There will come a time when these men/women will set lose an algo, with the intent of profit, and this whole shit show will seize up and divide by zero. That <ENTER> will not yield profit, but will instead set forth a chain of destructive events that races out of control. For those in the control room of these RnP algo's, I hope you aren't sociopaths. I hope you get that sense of dread, of fear, of knowing what you did. I hope you go to your grave, cowards, hiding from what you have done like Nazis fearful of every door knock, of every phone call.

For those of you who are in finance/investment/daytrading/whatever; think long and hard about the writing on the wall. Are you satisfied doing what you do? Are you productive?

When you are satisfied, you are successful. For that is all there is to success is satisfaction. – Will Rogers

The Weimar had this same period, with so much brilliance at work shuffling paper. When the game is up, well, I guess I should say "if" the game is up, make sure you have a seat. I would further note, seats won't be for sale, you need to snag one before the music stops.

Best wishes to all,


P.S. I am an angry, alcoholic, hermitic, luddite, misanthrope. True story.

Thu, 07/07/2011 - 19:05 | 1434437 SubjectivObject
SubjectivObject's picture

Thanks for that.

Thu, 07/07/2011 - 19:16 | 1434458 disabledvet
disabledvet's picture

at least you're angry.

Thu, 07/07/2011 - 19:22 | 1434446 TrafficNotHere
TrafficNotHere's picture

I did not consider the possiblities of these algorithms being used as economic weapons.

Crap, want to take down a company stock, or a country's markets and following, its economy... hell, just insert enough mess into a market, flash crash here and there... so the people lose confidence...


Fri, 07/08/2011 - 05:34 | 1435348 Jacks Creation
Jacks Creation's picture

Slow wars, silent weapons.

Thu, 07/07/2011 - 19:15 | 1434454 UGrev
UGrev's picture

As as a software developer as well, I too stare at these graphs and just go "deer in headlights".. but I am on your page here, brother. It's software as a gun for sure! Sometimes we geeks just do shit because we can and don't think about what it can really do. Nuclear science followed a similar same path. A powerful and wonderful new technology that could be used for good or evil. 

I don't know about you, but I've been contacted by no less than 3 companies looking for algo devs. I told each to fuck off because I knew exactly what they were doing. Warfare indeed; and I wanted nothing to do with it. 

Thu, 07/07/2011 - 23:35 | 1434974 aerojet
aerojet's picture

I think you're wrong.  It's not software as a gun.  These people are exploiting a software system in ways it wasn't designed to handle except through regulatory oversight.  The regulators are not doing their jobs, however.  We could end algorithmic trading tomorrow if we wanted to by simply adding delays to all those orders so that it would be impossible  to HFT or front run orders.  The trouble is, they are the only ones left trading and whenever the algos shut off, liquidity disappears. 

I just don't see it as weaponized software.  It's more some kind of fodder for a Bruce Sterling novel or something. 


Thu, 07/07/2011 - 19:19 | 1434465 Fukushima Sam
Fukushima Sam's picture

Just so you know, it's okay to write the word "fucked" here.

And I know the <ENTER> key thing.  That is always a bad feeling.

Fri, 07/08/2011 - 09:42 | 1436105 SoNH80
SoNH80's picture

My old man once erased a custom COBOL program he wrote by hitting "Enter."  He spent Thanksgiving 1989 wandering the house drunk, in his bathrobe.

Fri, 07/08/2011 - 20:20 | 1438760 TheRipper
TheRipper's picture

THAT is funny!  Nearly a beer-through-nose incident. 

Thu, 07/07/2011 - 19:28 | 1434481 ebworthen
ebworthen's picture

Thanks Cooter.

Yes, technology is a tool and science is knowledge.  Do we use them for good or evil?

Nitroglycerine - deadly explosive or help prevent a heart attack.

Splitting the atom - killing billions or creating energy.

I suspect these gyrations are a form of warfare; either between trading desks or between nations.

They are probes for weakness and advantage, or for manipulators here or abroad. 

They are either nefarious for profit, or traps being triggered.

We can hope they are signs of regulation and sniffing out the bad guys; but based upon the actions of Wall Street and Washington 2001-2011 I kind of doubt it.

Thu, 07/07/2011 - 23:52 | 1435008 CrazyCooter
CrazyCooter's picture

Feynman talked about that some in his classic interview ... I originally got the link to the YouTube off of ZH ... I put it up on my blog ...

Most folks won't like my blog. I am a crazy nutjob that packed it up to Alaska, but I think I got a swell deal.

Feynman has it figured out with tech, listen to what he has to say.

My other favorite source is Danny Hillis (he has a great book called "the pattern on the stone" for any older geek wanting to pass down a bit of insight into the profession) who wrote an article called "The Big Picture" back in '99.

Much like Stewart Brand says over at ForaTV, there are patterns in nature whose cycles are measured in many generations. We are at an inflection point in our species history; I think the outcome will surprise everyone. It always does in these situations.



P.S. For geeks that miss their "elenco electronics kit" as a gift idea for nephews (and the occasional neice), check out Thames and Kosmos, which have the following:

Right now, I am the "best uncle ever".

Disclosure, I have one sister (no kids) and a brother (my niece and two nephews)

Wait til they get "panning for alaska gold" dirt for xmas this year! <cackles madly> Dirt. Water. Gold lust. Mom's house. GrandMa's live for this kind of history. My mom will have to set up a bucket station in the house so they can flip out and try to sort the gravel from the goodies with the pan I give them with the dirt. :-)

Cheaper than flying and lots more street-cred ... plus, gold bugs gotta start somewhere!

P.S.S. Feel free to steal these gift ideas. :-)

Fri, 07/08/2011 - 14:05 | 1437477 ebworthen
ebworthen's picture

Thanks, good stuff.

Thu, 07/07/2011 - 20:36 | 1434615 magis00
magis00's picture

Right on Cooter -- thanks for sharing. 

Thu, 07/07/2011 - 21:07 | 1434687 Mec-sick-o
Mec-sick-o's picture

From your post, you'll probably like to read some of Ayn Rand work or novels, specially her 2 bestsellers, if you haven't read them yet.


Thu, 07/07/2011 - 21:29 | 1434724 takinthehighway
takinthehighway's picture

Thanks, Cooter. Certainly food for thought.

Thu, 07/07/2011 - 21:47 | 1434764 tom a taxpayer
tom a taxpayer's picture

Good insights, Cooter. Thanks for sharing.

Thu, 07/07/2011 - 23:39 | 1434980 aerojet
aerojet's picture

You're a bit over-dramatic.  Firing a round into the dirt in front of you isn't the same as pointing the rifle in the wrong direction and doing same.  You have to break two of the rules for anything bad to happen. 

The whole runaway algo scenario you describe will not happen.  We've had flash crashes and all the exchanges do is roll back the trades and return everything to normal. 

Fri, 07/08/2011 - 03:37 | 1435285 StychoKiller
StychoKiller's picture

Perhaps, but what will the exchanges do when it's EVERY trade...for days/weeks on end??

Thu, 07/07/2011 - 20:00 | 1434538 rsnoble
rsnoble's picture

I'm there dude.

Thu, 07/07/2011 - 20:11 | 1434564 toady
toady's picture

that's what my wife calls me!

Thu, 07/07/2011 - 17:26 | 1434210 MsCreant
MsCreant's picture

+500 trillion, located in a dark cesspool, rotting somewhere in the Caribbean Islands.

Funny shit!

jm is bright but still thinks you can anticipate these thieves, go with their flow, and earn. I have been saying this, jm and I had a nasty exchange over it a long time ago (though I respect him a great deal) but the longer you try to play their games the more likely you are to get burned. IF THEY PISS YOU OFF, GET OUT OF THE FUCKING MARKETS KIDS.

Thu, 07/07/2011 - 17:31 | 1434234 jm
jm's picture

That wasn't so nasty, was it... oh wait.

So how ya been MsCreant?


Thu, 07/07/2011 - 17:44 | 1434273 MsCreant
MsCreant's picture

Doing better. House destroyed by a passing Tornado when tree hit it, doing the whole insurance, rebuild trip. Living in a rental. But we are safe and good and I am still prepping for the worst. Storm may be a blessing in disguise, I have been forced to reevaluate everything. 

You guys who do this and can make it work are so bright, I can't help but feel that your intellect and (no offense) balls could be better applied somewhere else, solving real problems instead of trying to outscam the scammers. I love your breed if I am honest about it, but kinda hate what you do. Don't take it personally (doubt you will).

Hope you and your family are well.

Thu, 07/07/2011 - 17:54 | 1434292 jm
jm's picture

Sorry of the circumstances, but happy that your spirit is solid.

You are very kind.  All work is nothing more than a spiritual quest to unlock hidden mysteries of the universe, some more mundane than others.

Good luck in all ways.

Thu, 07/07/2011 - 18:16 | 1434347 Marley
Marley's picture

Sorry to hear of your misfortune.  Glad to hear you and yours are safe.

Thu, 07/07/2011 - 19:20 | 1434468 Uncle Remus
Uncle Remus's picture

Wow. Glad to hear you're ok.

Thu, 07/07/2011 - 17:36 | 1434244 hambone
hambone's picture

The market is rigged.  Very likely w/ government complicity.  Doesn't mean you can't make money but just don't expect the market to value technicals or fundamentals.  Reality is what those at the controls say it is.  So long as you obide by these rules (or lack there of), you and your assets float along.  Try to get cute and anticipate when "reality" interjects itself and you are likely to be very angry. 

There is nothing fair or balanced or "market" driven about this market.  Those who can see but don't (over) think win.  Those who can accept reality for what it is vs. what we wish will win.

I'll likely lose.

Thu, 07/07/2011 - 18:54 | 1434414 Rainman
Rainman's picture

Indeed. Captain Obvious to Earthlings : All commodity markets are rigged.

Meanwhile, Bennie fights the banks. He wants to put a hold on a wee bit of their " play money ".

Thu, 07/07/2011 - 17:31 | 1434231 I Ching
I Ching's picture

Earth isn't so bad.

Thu, 07/07/2011 - 18:14 | 1434341 Diogenes
Diogenes's picture

Anyplace else, we wouldnt stand a chance.

Thu, 07/07/2011 - 19:35 | 1434494 firefighter302
firefighter302's picture

+1. Bingo Hambone.

Especially government, banking and academia types of humans. They're usually the worst.

Mankind is best taken in small infrequent doses or avoided altogether.


Thu, 07/07/2011 - 17:12 | 1434152 youngman
youngman's picture

Its getting wierd.....very strange....maybe this is their end game...with a computer to bring down the political item of the day...a super computer that can move the market...I have to switch from beer to something stronger and faster...

Thu, 07/07/2011 - 17:24 | 1434188 plocequ1
plocequ1's picture

I have a gallon Jug of merlot and some Willy Loman brand pipe for when its time. 

Thu, 07/07/2011 - 17:55 | 1434294 Whalley World
Whalley World's picture

Here in B.C. we have another brand to fill our pipes.  Takes the edge off the upcoming end of the world as we know it. 

Thu, 07/07/2011 - 18:02 | 1434313 Saxxon
Saxxon's picture

Agreed; Earth herself is not so bad at all.

As for taking the edge off; try Tincture of Cannabis and a 90-minute Asian massage . . . I know you have both up in B.C.

Thu, 07/07/2011 - 18:50 | 1434402 hambone
hambone's picture


actually finally decided to downsize, buy the house we want (and can go 50% down on) in the place we want (Bend, OR) and get ready to pull the plug from the money making business and pull into the living biz.

I think getting out of debt is really the only path to freedom...the only path to living simply.  There is a part of me that really no longer wants to care what the fuck next lie they come up with to steal more time and money from their citizens.  Time to change the game and take off the debt / leverage shackles.

Thu, 07/07/2011 - 19:37 | 1434496 Herd Redirectio...
Herd Redirection Committee's picture

Right on!  Yep, when debt is there, a lot of people don't remember that ITS ALWAYS GROWING.  Even if you make payments the nature of compound interest (semiannually, daily, whatever) is that it grows the debt. Exponentially, if left unaddressed. 

Remember to get atleast 8 goats per ounce of gold in your barter transactions!  I heard an oz. of silver should always get you a chicken, as well!

Thu, 07/07/2011 - 20:19 | 1434585 Sunshine n Lollipops
Sunshine n Lollipops's picture

If I gotta trade an oz of ag for a chicken, it better be big enough to ride home.

Thu, 07/07/2011 - 19:44 | 1434500 firefighter302
firefighter302's picture

Hambone, you are on your game, tonight!

Brilliantly stated.  A+


Thu, 07/07/2011 - 19:42 | 1434507 IQ 145
IQ 145's picture

 10-4 good buddy. BC is great! I used to have a forty acre place near Nakusp when I was young; but like a typical California Pussy, I just couldn't stand the idea of being snowed in for a couple of months a year, and I sold up and moved to Hawaii. Worst mistake of my life. All it takes to keep the cold out is a sweater and a coat; what it takes to keep the American Ugly Stupids out, I don't know. Earplugs, a suit of armour, and more drugs than what's probably good for a fella. Imagine living in a country where a big bank, Scottia Mocatta, is also a metals refiner and sells gold and silver over the counter. AAArrgh. I don't know how much more of this shit I can stand; I may be back in Nelson soon.

Thu, 07/07/2011 - 18:06 | 1434316 cougar_w
cougar_w's picture

It's easier to approach the problem if you give it a face:

Okay she's got a lot more going on than just a face. But you gotta admit -- she's super.

Thu, 07/07/2011 - 19:03 | 1434433 Sunshine n Lollipops
Sunshine n Lollipops's picture

A winged avenger might be the only thing that'll save us!

Thu, 07/07/2011 - 17:14 | 1434159 carbon based unit
carbon based unit's picture

TPTB aren't about to reign in these guys.  its only the HFTs that stand between them and SPX 600

Thu, 07/07/2011 - 17:16 | 1434166 economessed
economessed's picture

Let's bring back open outcry, if not for nostalgia sake, for the sake of clarity in commerce!

Thu, 07/07/2011 - 17:31 | 1434230 wandstrasse
wandstrasse's picture

then the tbtf would breed brokers who can scream like Damien from the 'Omen' movie. Just for destruction's and awe's sake.

Thu, 07/07/2011 - 17:18 | 1434181 gwar5
gwar5's picture

The fact that the squids are not audibly freaking out about this speaks volumes.

If an outsider had such an edge on the squids, they'd be going ape. They'd demand someone be caught and that an extreme example be made of them.

Thu, 07/07/2011 - 17:29 | 1434222 MsCreant
MsCreant's picture

Damn, you make good sense. We saw it live when that young man stole their program. Had the FB fucking I on in how fast? Hours?

Thu, 07/07/2011 - 17:43 | 1434266 narapoiddyslexia
narapoiddyslexia's picture

Totally agree.

Thu, 07/07/2011 - 19:44 | 1434509 IQ 145
IQ 145's picture

 Too true; "the dog that didn't bark", Sherlock Holmes.

Thu, 07/07/2011 - 21:54 | 1434776 FeralSerf
FeralSerf's picture

Last I heard the poor bastard's been put awau for years!

Moral:  escaped slaves are hunted down and punished without mercy.  That's what the police are for.

Thu, 07/07/2011 - 18:07 | 1434320 cougar_w
cougar_w's picture


Thu, 07/07/2011 - 17:19 | 1434185 Downtoolong
Downtoolong's picture

Congratulations all you owners of USO, UCO and SCO. Now you see what you really bought into. It's a far cry from hydrocarbons, and always will be.


Thu, 07/07/2011 - 17:22 | 1434192 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

When it comes to criminality, no one does it better than the good old fascist USA.

Please God, within my lifetime, let me wake on this planet without the USA existing. Cut this cancer from any future history.

Thu, 07/07/2011 - 17:30 | 1434225 Raymond Reason
Raymond Reason's picture

Sooo... this means we can't count on you for service in the military?

Thu, 07/07/2011 - 21:56 | 1434780 laosuwan
laosuwan's picture

Here is what soldiers get for their "service"


Thu, 07/07/2011 - 17:33 | 1434239 MsCreant
MsCreant's picture


Feel it in your gut, don't you know better? It ain't about the USA any more. All of the so called developed and developing nations are in on the ponzi now (China doesn't do these things, right? Bah). It ain't about countries. A country is something you can ass rape, but really quite irrelevant. Now hold that anger....steady now... where does it need to go to?

Thu, 07/07/2011 - 17:59 | 1434308 Whalley World
Whalley World's picture


From my perspective, I am glad to be on the Northern side of the border!

Thu, 07/07/2011 - 19:50 | 1434518 IQ 145
IQ 145's picture

 plus 100. "Most stable banking system on the planet"; number one. look it up. as soon as you cross the border everything feels different, this giant paranoid simmering frenzy in your head starts winding down. get out in the country in BC and try to worry; you have to work at it. It doesn't come naturally.

Thu, 07/07/2011 - 18:10 | 1434332 cougar_w
cougar_w's picture

I got really angry a while back, and while still in the mood wrote the following story:

Pretty damned disturbed. But for all that, just about right.

Thu, 07/07/2011 - 22:13 | 1434795 magis00
magis00's picture

Took a few minutes to read it (amazing the lengths to which one will go to avoid studying Secured Transactions for the Bar, eh?) . . . and really enjoyed the story. 

“Such a serious face,” the tigress said fondly even as the angel swallowed a sob. “I only meant that you should remain a creature of the light, and to veer mostly toward your strength which is charity and kindness. And if in the end you must kill them then remember to take a moment and shed a tear for the sinner.”

I absolutely love ZH - what quality folks we have here.  Thanks cougar_w. Be well.

Thu, 07/07/2011 - 19:16 | 1434460 CrazyCooter
CrazyCooter's picture

Talking off the cuff here ... but ...

Almost all strong nations in history were established by/through military victory. The US (presently) has the strongest military courtesy of the petrodollar. In the event of "a world wide default" (can we call that WWD? Its like turning half of WMD on its head...) the US will have all the hardware and trained men/women to do what they want to do. The biggest risk at this point is supply/logistics (i.e. oil to run equipment, food/water for troops, etc etc).

Given a big fat war could clear much debt, the US is probably in an advantageous spot compared to all the other beauty paegent contestants. For nations that think they are immune, the US could simply blockade their trade until they implode.

It is a dark way of thinking, but I am open to other ideas about how the near term implosion of debt ponzi is going to look.

What I do feel confident of is this:

  • The system will implode
  • The implosion will lead to widespread war
  • No elite benefit from slinging nukes
  • Crazies will sling nukes (if they got em)
  • Someone(s) will be put to the sword to feed the victor(s)

I continiously struggle with how this will play out. The system is slowly coming apart at the seams ...




Thu, 07/07/2011 - 19:55 | 1434530 Rusty Shorts
Rusty Shorts's picture

Cooter, you're all over it man.

Thu, 07/07/2011 - 20:53 | 1434661 Milestones
Milestones's picture

How will it play out--we know badly; just which bad? U.S., Euro and China are all in the bed. Who is going to be the fuckstick to blow it up. All it takes is one. Israel??     Milestones

Fri, 07/08/2011 - 01:24 | 1435145 MsCreant
MsCreant's picture


Great observations here and in the comment you posted earlier in the thread.You are right, of course. But who's interests is that military protecting? Is it our government, precisely, that is so expansionist?

The cops here in town rolled up heavy recently on a local flea market located in an impoverished section of town (course lots of sections are). ATF, Homeland Security, FBI, and of course state, county, and local cops. Why? Because they were selling fake Gucci and other fake brand names. This was emphasized over and over in the news. They interviewed the neighbors and some of them were afraid to talk on camera, some thought the tactics were heavy handed, and some bought into the idea that if you are selling knock offs, this is a natural consequence for doing that. They emphasized that the corporations were complaining and begging law enforcement to crack down on this activity. Does that make you go hmmmm...? Did me. The corporations in my humble opinion make the borders of countries irrelevant. Why does the Bernanke bail out Europe? Cause they are our allies? Hell no. Corporate interests.

But a deeper truth is that countries are now, more and more, being run as corporations too, thus they blurr and merge, living off the same lifeblood, interests, goals, and strategies. When they gave corporations the status of personhood, the genie was let out of the bottle.

Fri, 07/08/2011 - 08:06 | 1435525 earnulf
earnulf's picture

Just a thought, but why don't we ever see the SWAT teams coming out to bust the knock-off Wal-Mart brand clothes or the Target only merchandise?     Because the people who can get the SWAT team are selling the same shoddy goods for WAY more than they are worth because they have a funny name or trademark symbol on it.    Remember when Quality was more important than whose name or brand was on an inferior quality product?

Thu, 07/07/2011 - 17:24 | 1434194 ebworthen
ebworthen's picture


Reminds me of a dog shaking water off it's body; the twist and ripple that starts at the nose and ends at the tail.


Thu, 07/07/2011 - 17:22 | 1434197 Oh regional Indian
Oh regional Indian's picture

Time to leave the market to these machines. Unless you are like CPl and can actually beat them at their game.

For the rest of us, such a time to be on the sidelines, eh? Epic times. I felt like this last while watching the Dot Con boom crumble around me. Epic boom/bust. Then housing.
Now, the market crash of market crashes looms. Commodities or Stocks or Bonds?

Or will they all go down together? What does that portend for metals?

Imploding stocks..... margin calls..... maybe an interim high in Ag/Au July 13th and then a dive and a grand resurface August 15th (the infamous August 15th Anniverasry, 40 years from 1971).

or some such. Not trading advice. Just gut feel. Let me see if i have the guts to play it myself. ;-)


Thu, 07/07/2011 - 17:26 | 1434211 cossack55
cossack55's picture

I've gone strictly food, Berkey, brass and lead. You know, the basics.

Thu, 07/07/2011 - 17:29 | 1434226 Oh regional Indian
Oh regional Indian's picture

Hmmmm... I'm a few months behind, but it's about time.

Epic Shit on it's way!


Thu, 07/07/2011 - 21:39 | 1434742 takinthehighway
takinthehighway's picture

ORI, you're probably hip tp Jim Rawles, but, just in case...

Fri, 07/08/2011 - 01:59 | 1435180 Oh regional Indian
Oh regional Indian's picture

Was aware of that blog takinthe, but thanks anyways.

Here in India, all that stuff looks interesting! :-) I'm learning that prepping here has a whole other flavour to it!


Thu, 07/07/2011 - 17:23 | 1434202 buzzsaw99
buzzsaw99's picture


Thu, 07/07/2011 - 17:26 | 1434207 Dr. No
Dr. No's picture

Its not news.  Desensitized.  Disconnected.  The team I am part of has an "I" in it. Look out for yourselves and your personal/prefessional network.  Let the preditors feed on themselves.

Thu, 07/07/2011 - 19:23 | 1434477 disabledvet
disabledvet's picture

You work for the media? You, you, bastarde!

Thu, 07/07/2011 - 17:29 | 1434214 Franken_Stein
Franken_Stein's picture


"The American way of life is not negotiable."


George H.W. Bush, 1992


That's why oil can only be paid in U.S. dollars, of which we can print as many as we want.

At a cost of $0.03 per $100 note.

Paper for oil, the best con job the world has ever seen.



Thu, 07/07/2011 - 17:41 | 1434259 NotApplicable
NotApplicable's picture

Well, they either get paper or civil unrest/war, so which would you choose?

Remember, TOTUS likes to look for "ass to kick."

Thu, 07/07/2011 - 19:22 | 1434474 CrazyCooter
CrazyCooter's picture

More like a three step racket ...

  1. petrodollars enable really beefy military
  2. really beefy military "convinces" nations that selling oil in only dollars is a good idea
  3. profit



Thu, 07/07/2011 - 20:30 | 1434605 delacroix
delacroix's picture

It used to be $.02, damn inflation

Thu, 07/07/2011 - 22:24 | 1434835 FeralSerf
FeralSerf's picture

Everyone will be getting ATM cards instead of Ben Franklins RSN.  That should help.

Thu, 07/07/2011 - 17:34 | 1434242 Cow
Cow's picture

Fat Finger, bitchez!

Thu, 07/07/2011 - 17:38 | 1434252 NotApplicable
NotApplicable's picture

Shaking the trees, now in Technicolor!

This is an event that regulators need to spend time taking apart and analyzing in detail. It will be well worth it, because blah, blah, blah blah.

I somehow doubt that 'investigators' at the SEC will be analyzing anything worthwhile except tranny porn.

Thu, 07/07/2011 - 17:43 | 1434268 mynhair
mynhair's picture

All I see are tired longs getting out on these gyrations.

Thu, 07/07/2011 - 17:44 | 1434269 Elmer Fudd
Elmer Fudd's picture

from Goodfellas:

"Why don't you boys go down to Wall Street and find some real crooks?"

Thu, 07/07/2011 - 17:44 | 1434271 There is No Spoon
There is No Spoon's picture

The human element does factor in as well - there's too many longs in crude (and corn) futures so they will exacerbate the algo induced selling. Perhaps this will be induced by a dollar rally set off by euro weakness or resolution of the debt ceiling.

Thu, 07/07/2011 - 17:54 | 1434289 Atomizer
Atomizer's picture

T Boone Pickens must be throwing his last hail mary pass

Thu, 07/07/2011 - 19:45 | 1434511 CrazyCooter
CrazyCooter's picture

If I was "money" whose index and ring finger had equal length, I would be loading up on decent carbureted trucks from the old days. I would set up a shop, some place where industry put good mechanical professionals on the street without pay, and slowly work an assembly line to semi-mass produce bi-fuel caurburated vechicles.

Caurburated used trucks/cars from the pre-EPA regulation days.

I would then price out the bulk purchase and installation of residential nat gas hook ups, to on-vehicle CNG compressors (110v residential external power), and install those as an option.

The end unit would be an "old school" vehicle the "working man" can maintain, with the option of either natural gas (assuming a residential nat gas supply with the optional onboard 100v nat gas compressor) or gasoline.

I think this business model would be NUTS today. But having a working shop in place, getting logistics, labor, and supply chain in place, will pay handsomely when oil does the moon shot and nat gas is flooding the market via fracking (because it doesn't export cheaply).

Now THAT is a seat at the table (try to fuck with this business owner when the SHTF when you set up shop in "red state" america and employ many local families).

For you *wealth producers* out there who want to run with this, I just ask that you call 'em Cooters. See if you get "Tuckered" by the big boys ...



Thu, 07/07/2011 - 20:39 | 1434622 delacroix
delacroix's picture

nat gas conversion kits are available for most vehicles. installing those kits, as a business, requires a seperate license, for every year, make, and model.   driving to a cng fueling station, is more cost effective, than an onboard compressor, if they even make one. they do make a home based natty compressor, but they're pretty pricey. a diesel will run on %70 cng %30 diesel, and meet any emission standard existing, or planned, without additional modifications.

Thu, 07/07/2011 - 23:18 | 1434940 CrazyCooter
CrazyCooter's picture

installing those kits, as a business, requires a seperate license, for every year, make, and model.

This is true, for EPA regulated vehicles, thus my commentary for "old school" caurberated vehicles. EFI showed up in the early 80s, so maybe the mid 70 stuff and back. Those are grandfathered in unless the rules are rewritten.

CNG stations are rape, I priced them. They are (sort of) kept on part with gasoline, so you need to be a commercial entity at which point you have your own gas line and a compressor.

My call was for a ZHer with a concience who has the money-balls to do a "productive investment" which would be a side project that will save his/her ass when bankers decorate lampposts. There is only so much ranch land in Montana for sale you know...



Thu, 07/07/2011 - 17:54 | 1434290 FranSix
FranSix's picture

It all depends on whether you think the asset in question is mispriced, that the price of the underlying commodity is either too low, or too high.

Thu, 07/07/2011 - 17:55 | 1434297 defender
defender's picture

Soooo, just to put this out there, JPM bought all that oil from the strategic reserves how long ago again?

Thu, 07/07/2011 - 19:53 | 1434526 espirit
espirit's picture

One must realize that the U.S. oil consumption... is 22 million barrels per day.

For this sale of reserves to impact the market as it has, have been leveraged quite high and against the current gobble-de-gook of evil oil speculation.


Thu, 07/07/2011 - 17:57 | 1434299 geminiRX
geminiRX's picture

nice drawings of alligators (image 6 and below)

Thu, 07/07/2011 - 23:37 | 1434978 Hi Ho Silver
Hi Ho Silver's picture

Looks like assault weapons if you ask me.

Thu, 07/07/2011 - 18:08 | 1434323 trentusa
trentusa's picture

Whats up you guys! Guess who's dad says he's getting fired if he dares start non-profit side business in spare time with spare money to try to create some jobs? I give anybody three guesses who in this room could possibly suck that bad!

Thu, 07/07/2011 - 18:15 | 1434343 trentusa
trentusa's picture

i got yanked out of the stock market three weeks ago by my boss but i'm still hangin' out w/ u guys4some reason. I'm supposed to be working on new side biz, tax lien investing, which I was REALLY excited about, but hell nevermind seriously tho easier than options market

Thu, 07/07/2011 - 19:48 | 1434516 CrazyCooter
CrazyCooter's picture

This public service message brought to you by the letter "Arrrgh!"?



Thu, 07/07/2011 - 18:21 | 1434353 JW n FL
JW n FL's picture


Max Keiser [7-7-11] 'Europe's Neo Feudalism' Stacy Herbert and Michael Hudson [KR]

Thu, 07/07/2011 - 18:24 | 1434361 swissinv
swissinv's picture

buy oil but only physical ;)

Thu, 07/07/2011 - 19:30 | 1434486 disabledvet
disabledvet's picture

I do it almost everyday..and that's the bullshit of it all.  Where's the physical in all this?  Nowhere?  And it's not speculation at all?  Obviously some oil company somewhere is worried about the fact that they don't have oil anymore..."so let's make some oil up" then.  Obviously life would be nice if it worked that way...

Thu, 07/07/2011 - 18:29 | 1434370 mr. mirbach
mr. mirbach's picture

Does anybody know if there is a possibilty that these shennanigans are being perpetrated by the Exchange Stabilization Fund?  Same question about how the Markets can open 100 points up on no volume. Things that make you go WTF?!?

Thu, 07/07/2011 - 18:38 | 1434379 Atomizer
Atomizer's picture

Have you watched ESF part 5? Released today. Perhaps you can answer your own questions.


Thu, 07/07/2011 - 20:32 | 1434611 CrazyCooter
CrazyCooter's picture

You sir, are my hero today. The last time I checked MS, it seemed pretty inactive on content. Clearly, I was wrong.



Thu, 07/07/2011 - 18:34 | 1434375 Thomas Jefferson
Thomas Jefferson's picture

The doom in this thread is strong.  I endorse it.

Thu, 07/07/2011 - 18:52 | 1434407 goldenbuddha454
goldenbuddha454's picture

its kind of fun actually.  Set a bid ultra low on those stocks in the future and hope they'll hit with a flash crash and you're rich!

Thu, 07/07/2011 - 19:09 | 1434442 cougar_w
cougar_w's picture


JPM will be rich and your trade will get busted back. But you still have to pay the fee.

You have much to learn, young Padawan

Thu, 07/07/2011 - 19:03 | 1434434 Coast Watcher
Coast Watcher's picture

Why can't the SEC or whomever rule that all market purchases must be held for at least an hour before being sold? Or a day, for that matter. If daytraders are responsible for most of the market aberrations, as has been discussed here, wouldn't this take the edge off?

Thu, 07/07/2011 - 19:13 | 1434453 cougar_w
cougar_w's picture

It would take the edge of, yes. And create a fair and balanced market. Or something.

It would also zero-out the entire quarter's profits for GS and JPM. Tank the markets. Cause Treasury auctions to fail. And give Ben Bernanke a pimple on his butt.

So as you can see, never gonna happen.

Thu, 07/07/2011 - 20:03 | 1434548 Rynak
Rynak's picture

I like your argumentation style lately :-)

(Personally, i prefer a plain old speedbrake in the form of lower resolution in the time domain: Define a quantum (i.e.  10 seconds), and all offers in such a quantum are then considered together when resolving them. Bots could still get an edge in being the first one to bid, but rapid moves like with those algos, would become impossible.)

Thu, 07/07/2011 - 20:40 | 1434628 cougar_w
cougar_w's picture

If you like my style here then you may want to read my fiction as well. Money -- flames -- carnivory -- hi-frequency trading -- goddesses gone wild -- it's so much like Wall Street they should make it into a movie.


Thu, 07/07/2011 - 21:21 | 1434704 Rynak
Rynak's picture

Thank you :) Will give this a read during the weekend.

Thu, 07/07/2011 - 19:20 | 1434471 Greeny
Greeny's picture


Ohh no!!!! I'm scared, price actually flactuate between

98 and 98.20, no f*cking good :)))

Couple swings, otherwise just tight scalping in the range, nothing unusual. If you so sure this is manipulation, then you can use fractals too: buy low, sell high in the fractal channel, what's the point??? Buy few cases of canned food, hundred gallons of water stick few pieces of gold in the a$$ and hide under the rock: wait for aliens to take over Washington and Wall street.. *LOL*


Thu, 07/07/2011 - 19:25 | 1434480 cougar_w
cougar_w's picture

They can swing it whenever they want to. And by extension, as much as they want to and for as long as they want to.

I for one do not think they should have that power.

Thu, 07/07/2011 - 19:31 | 1434490 assumptionblindness
assumptionblindness's picture

Oh, and don't be surprised to see the equity flash crash transposed to other politically convenient products when so required (preferably before key political events that require the consumer to suddenly feel wealthy). Such as crude... and of course precious metals (which incidentally reminds us: has anyone found who caused that massive crash in silver on May 1 which marked the top in the silver market? We didn't think so).

Tyler, a modern day Nostradamus you are!  This is one brilliant piece of predictive prose that Bayes would conclude has a HIGH probability of occurrence given the right political (POTUS re-election) and central planning (QE3/pump the Russell) conditions. 

The classic "Red Button" we used to fear from the cold war era has been repurposed and is now connected to a co-located server in New Jersey!  Ha!

Thu, 07/07/2011 - 19:35 | 1434491 chump666
chump666's picture

It's fascinating stuff.  But, HFT's are here to stay.  C'mon do you really want the market supporting cartel overlords (Central banks/government) regulating HFT's?

Let'em crash the market, it needs a flush out anyways.

I have seen human fat finger/inside trades/and market cornering sell offs that would rival HFT's.

May 6th was tasty because the humans also panicked.

Life is chaos.

Thu, 07/07/2011 - 19:35 | 1434495 Double down
Double down's picture

One of us.

Thu, 07/07/2011 - 19:52 | 1434524 nifty
nifty's picture

Tyler, How are we to read the second group of charts, with the white backgrounds? Colors mean nothing without a key..

Thu, 07/07/2011 - 20:01 | 1434541 rsnoble
rsnoble's picture

Ok, so what's the conspiracy this time? Someone connected to Obama is going to flash crash the crude markets so we can get fuel for half price in a 30 second window?

Thu, 07/07/2011 - 20:02 | 1434544 Stuck on Zero
Stuck on Zero's picture

These market actions look like "peg hunting."  In this scenario proble for limit stops of your opponents in the market and when you find them your grind them to the wall.  It is similar to jogging sensory inputs into a control loop looking for the out-of-band limits.  When you've found them you can drive the control system into predictable behavior.  Pilots do this in Dog Fights.  They drive their opponents into limits until they find one they can surpass and then they hold the opponent their till they self-destruct or you can shoot them down.  I guess these markets are like war.

Thu, 07/07/2011 - 22:17 | 1434815 HungrySeagull
HungrySeagull's picture

Dogfighting in Fighters is all about energy managment. The one who does this best is the one who will win when both plane's energy approach zero.

Energy is expressed in ability to manuver, how much space between you and earth and how mmuch time you have left to get it done.


There was a story somewhere where a Mustang Pilot found himself face to face with a Wulf German both going straight up. Eventually the German Engine could not sustain and the plane dropped away first to be torn apart by the mustang.

Fri, 07/08/2011 - 01:34 | 1435160 MsCreant
MsCreant's picture

Algos getting inside each other's ODA loops. You set the conditions and force the other one to react, and get out of your own reactivity. Good way to present it, SoZ.

Thu, 07/07/2011 - 20:04 | 1434551 TX-Mike
TX-Mike's picture

Cooter, thanks for sharing.  Good post for the non-techies.

My professional role is similar but I work on the largest of the Internet routing equipment in live production.  I've felt that dread as well when you hit <enter> an entire state loses their Internet service.   The part that gets me during every maintenance, and we have one tonight, is that if we don't do our jobs right, someone might not have e911 service and could die.   Computers (Internet routers, etc) are tools and just bits/bytes/wires, but the real world human impact is as real as if I just kicked another ZH'er in the nutz..

For the life of me I can't understand why anyone messes with these markets any more.  It's insane to think that a massive train wreck isn't just around the corner.  Between real estate holdings, physical PMs, and a solid investment in Lead and Lead Launchers, I feel a lot better than I did with my "wealth" in "the market".

I welcome the activities by groups like Wiki-Leaks, Anonymous, etc.  I applaud their use of technology to expose the human filth lurking in shadows that seek to suck off the hard work of some many others. 

Thu, 07/07/2011 - 20:20 | 1434589 lawrence1
lawrence1's picture

Agree.  Decided not to touch these markets in any way, withdraw totally from the rigged markets, physical PMs only and, of course, necessities like a debt free home outside of the USA. 

Thu, 07/07/2011 - 20:07 | 1434555 razorthin
razorthin's picture

"top in the silver market"


Thu, 07/07/2011 - 20:43 | 1434634 Sokhmate
Sokhmate's picture

is it just me? i see a vagina

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