Presenting The Reason For The Thanksgiving After Hours Melt Down: Another Electronic "Glitch"

Tyler Durden's picture

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themosmitsos's picture

NO WAY !!

I do NOT buy it!!

Don't fucking tell me somebody fucked up and "Accidentally left the markets trading AH" !!

Fuck that!!

IT WAS A SCAM!!

Sudden Debt's picture

IIIIIIIIIIIItttttttttt's ...MEDICINE TIME!!

You want the blue or red once today?

Water or Vodka to wash them down?

the not so mighty maximiza's picture

a slow gin fiz with a chaser of prun juice.

Kobe Beef's picture

I, for one, welcome our new robot masters...

cossack55's picture

Anyone need to borrow a match?

TWORIVER's picture

For the Gold bugs. You are in good shape as Head and Shoulders is invalidated and a rally to 1500 is likely. The caveat is if we break 1385 first, That would negate any bullish potential. I think you guys will get your rally, just be mindful of reality below 1385. Have a good one.

Sudden Debt's picture

I guess will first see some attempts to get that down. But the more they try, the worse it will get for them :)

TWORIVER's picture

don't disagree, but the bulls should be able to get it over 1450 without much trouble. Gold corrrected from 1424 to 1310, so the upside projection would be 1485 - 1535. Just being mindful of 1385 in the meantime.

 

 

jus_lite_reading's picture

Something smells downtown, and it ain't the Fulton fish market!

Sudden Debt's picture

SOMEBODY PLEASE FIX THAT FUCKING FUSEBOX!!

StychoKiller's picture

Aye, we're doin' the best we can Captain, but these new pennies don'ave enou' copper in'em!

doggis's picture

how truly broken are these markets when moves reflects insider information or flash crashes. what is wrong with market participants, why is this 'normalized' ???? bull market my ass!

Oh regional Indian's picture

Flash Crash my Ash!
No accidents, per se, here. The system is fairly well controlled. The timing alone makes it suspicious. It was another test of one sort or another.

The vicious down move, when it does come, will be a controlled or timed crash.

ORI

http://aadivaahan.wordpress.com

Sudden Debt's picture

anything is possible.

It could well have been that Benny B. took his playstation controllers instead of his markets controllers and that the ship went down because nobody was pressing the buttons.

 LET'S ALL BLAME SONY FOR MAKING THOSE CONTROLLERS SO FCKNG COMPLICATED!!!

FranSix's picture

How might one go about pulling the plug, for example?  You set the market up for hyperinflationary expectations and currency collapse while you work towards negative interest rates in the short term market.

Not that anyone really has any control over the whole issue.

Oh regional Indian's picture

Hey SD, your comments are always, interesting, funny, appropos, etc. But your Avatar drives me nuts, I have to scroll away!

 

Just letting you know.

And yes, so many possibilities. 

Market makers and market "breakers", co-located and co-controlled. Not a great idea, eh?

ORI

http://aadivaahan.wordpress.com

A_MacLaren's picture

How can it be that the cause/blame is not directed Waddell and Reed?

Aren't they always to blame, scapegoat and all... ?

Crispy's picture

Of course we could take all the volume back to the floors. But then there would still be complaints of robbery.

 

trav7777's picture

look; the reality here is that you have potentially thousands of algorithms competing.  There has been no integration testing of these things.  It's like a digital version of Robot Wars, you don't know what the other guy's fielding until you see it.  A lot of times shit just happens that's unanticipated and the speed of computers means it runs away from you faster than Chernobyl going suddenly critical.

Imagine if you installed 500 programs onto Windoze which were programmed to terminate the other running programs and hog system resources.  That is the modern market.

mikla's picture

+1

It is a very simple engineering concept that "summing" noise curves results in *increased* rare events of dramatic amplification.

The casual observer might expect that over-all, summing noise curves results in a more *stable* system -- the noise curves average out each other.  And, that is true.  Most of the time.  Until it's not.

In effect, there's a rare chance that all the curves you are summing are "accidentally" ALL at their peak, yielding a HUGE net peak, or ALL at their trough, yielding a HUGE net trough.  That's Taleb's Black Swan.  That *will* happen, because it can't not happen.  And, with HFT, it will happen at increased frequency and increased severity.

Making it even *worse* (we were screwed even before this next assertion), these market systems engage in *intentional feedback loops*.  When one predatory algorithm sees a trend, it "piles onto" that trend.  That means that literally, we have a system ENGINEERED to create Armageddon.  (No, "breakers" won't fix this, as seen in continual breach of lock-limits on commodities futures markets, and as seen in dramatic "drift" from "true" price discovery.)

Taleb's complaints were that we *could* engineer for "stability" (yes, at the possible expense of "perceived short-term efficiency"), but instead, we engineered for brittleness and a system intentionally designed to destroy the world market system.

Thus, it is not a question of "if" but "when".

Bummer.

If you're a visual person, check out the "red spike" in the graph below:  Things like that shouldn't occur, but will, and do, at increasing rate and amplification based on the above discussion.

mbeebe's picture

This did not occur on the third Friday or typical monthly expiration..it was the 4th Friday. Nonetheless, there were some weekly options that were exercised that should not have been.

SwingForce's picture

The 26th was not the 3rd Friday, only Weekly Options expired that day, not monthly.

Bearster's picture

Just think for a moment, if it was the Internet itself that he was describing.  Words like "fragmented", "unprecedented complexity", "dependence on technology", "being forced to do more with fewer people", would not be used.  The Internet is extremely robust, as those who are following the failed attempts to censor wikileaks can see.

What's the difference?  The Internet is not micromanaged (mismanaged) by regulators.

CitizenPete's picture

    << be leave >>

 

 !piD gnikcuF ehT yuB

spekulatn's picture

Markets should never close. Trade 24 hours a day. 7 days a week. Even on holidayz.

 

 

TraderTimm's picture

This is as 'accidental' as CME's order-crossing from QA to Production on Globex. How they still have any traders confident in their technology is utterly unfathomable.