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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
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,
2011. However, on closer inspection, this is something entirely
different.
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:
Symbol UCO, PROSHARES ULTRA DJ UBS CRUDE
Symbol USO, UNITED STATES OIL FUND LP:
Symbol SCO, PROSHARES ULTRA SHORT DJ UBS
CL.Q11 - AUGUST 2011 CRUDE OIL
Symbol UCO, PROSHARES ULTRA DJ UBS CRUDE:
Symbol USO, UNITED STATES OIL FUND LP:
Symbol SCO, PROSHARES ULTRA SHORT DJ UBS
CL.Q11 - AUGUST 2011 CRUDE OIL
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There is a definite camel toe in the last four.
India largest lender stops lending
http://gmbpost.com/investment-news/india-real-estae-sbi-stops-lending/
that last image reminds me of Darth Vaders Tie fighter.
maybe they should call this partern "The Dark Side of the Force"
I'm completely operational and all my circuits are functioning perfectly.
HAL, override your programming, password: C0nd1t10n A1pha
Maybe Cuomo wants to know about it
not that I understand, but I was trading uco and sco today, I trade those intraday on a reguar basis because it has nice movement both ways. was kinda crazy. wish I understood what the pretty pictures mean and perhaps they should come with some notes to explain. I'd imagine to most like myself they mean nothing.
They mean that playing with robots can result in crushed/ripped-off limbs!
you start to get these really fast moves in zero time almost, that swing up and down. so you buy uco and sco at or near good times to buy. you follow rapidly with stop looses on the way up, and on the way down. about a nickle behind. because they are leverage funds the intra day move often in these two are about 2%. you could see why the algos' would hung there because such moves with hft mean good profits for them.
if you want to intrday day trade these aren't bad, but have to have fast fingers. your stops will get hit both ways and instead of two winning trades you will have two losses. that what happens with set stops on these securities.
if you've got a 50 cent move, on a thousand shares, then both ways. that's a grand of easy money on the day without having to hold overnight. that's why they are there.
OK, so you show this nane data, what's done with it, and what's the point. I see the authorites don't do anything.
You don't have to tell me twice, exited UCO 2x long CL at $95.xx, after in on TDs recco at $90.
Swimin' with the big bots.
If no biotraders are left, then this is the rudimentary beginning of HFT's programmed to feed off of HFT's.
Remember one of the comments of the commission looking into the flash crash -- that future stop loss orders might not be honored and the comment by a futures trader that the S&P was being manipulated by somebody who didn't mind losing money. Put these together and these new algos would appear to be the government making preemptive strikes on stop loss orders and not caring how much money they lose doing it. S&P I can understand; oil I can understand (our government is run by manchurian candidates and they want the brent spread down); nat gas, not so much.