• BullionStar
    05/30/2016 - 21:24
    The US Gold Market is best known as the home of gold futures trading on the COMEX in New York. The COMEX has a literal monopoly on gold futures trading volumes worldwide, but very little physical...

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

Tyler Durden's picture

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Mon, 12/06/2010 - 10:03 | 781709 themosmitsos
themosmitsos's picture


I do NOT buy it!!

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

Fuck that!!


Mon, 12/06/2010 - 10:09 | 781726 Sudden Debt
Sudden Debt's picture


You want the blue or red once today?

Water or Vodka to wash them down?

Mon, 12/06/2010 - 10:35 | 781804 the not so migh...
the not so mighty maximiza's picture

a slow gin fiz with a chaser of prun juice.

Mon, 12/06/2010 - 14:28 | 782731 Kobe Beef
Kobe Beef's picture

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

Mon, 12/06/2010 - 13:19 | 782420 Rick64
Mon, 12/06/2010 - 10:04 | 781711 cossack55
cossack55's picture

Anyone need to borrow a match?

Mon, 12/06/2010 - 10:07 | 781715 TWORIVER
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.

Mon, 12/06/2010 - 10:11 | 781736 Sudden Debt
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 :)

Mon, 12/06/2010 - 10:13 | 781744 TWORIVER
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.



Mon, 12/06/2010 - 10:06 | 781718 jus_lite_reading
jus_lite_reading's picture

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

Mon, 12/06/2010 - 10:07 | 781719 Sudden Debt
Sudden Debt's picture


Mon, 12/06/2010 - 19:46 | 783944 StychoKiller
StychoKiller's picture

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

Mon, 12/06/2010 - 10:07 | 781720 doggis
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!

Mon, 12/06/2010 - 10:09 | 781728 Oh regional Indian
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.



Mon, 12/06/2010 - 10:15 | 781743 Sudden Debt
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.


Mon, 12/06/2010 - 10:21 | 781762 FranSix
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.

Mon, 12/06/2010 - 10:26 | 781773 Oh regional Indian
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?



Mon, 12/06/2010 - 10:44 | 781836 A_MacLaren
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... ?

Mon, 12/06/2010 - 10:26 | 781774 Crispy
Crispy's picture

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


Mon, 12/06/2010 - 10:28 | 781778 trav7777
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.

Mon, 12/06/2010 - 11:18 | 781920 mikla
mikla's picture


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".


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.

Mon, 12/06/2010 - 10:32 | 781794 mbeebe
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.

Mon, 12/06/2010 - 10:33 | 781797 SwingForce
SwingForce's picture

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

Mon, 12/06/2010 - 10:51 | 781851 Bearster
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.

Mon, 12/06/2010 - 11:10 | 781893 CitizenPete
CitizenPete's picture

    << be leave >>


 !piD gnikcuF ehT yuB

Mon, 12/06/2010 - 12:21 | 782131 spekulatn
spekulatn's picture

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



Mon, 12/06/2010 - 13:35 | 782510 TraderTimm
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.

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