Reuters Special Report On What Caused The "Causeless" Crude Crash; Other Hedge Fund Casualties Identified

Tyler Durden's picture

A tremendous report by Reuters' Matthew Goldstein, Svea Herbst, Jennifer Ablan, Emma Farge, David Sheppard, Claire Milhench, Zaida Espana, Robert Campbell and Josh Schneyer, identifies that while the shaky macroeconomic conditions and an overbought market were among the key reasons for last week's history crude rout, the match that caused an unseen before plunge in commodities was, you guessed it, "computers." Naturally, this is not unexpected to Zero Hedge readers who have been warned about the massive instability of a market comprised almost entirely of unsupervised algos, since the spring of 2009 (a phenomenon which the CFTC and SEC will not "comprehend" and/or change, until it is too late). Additionally, in addition to the previously identified losses at Clive Capital and Andrew Hall's latest plaything, Reuters also identifies BlueGold, Winton Capital and FTC. Basically, throw out a name that has energy exposure (let's not forget Touradji or Centaurus) and you likely have a winner. Must read.

Special report: What really triggered oil's greatest rout, from Reuters

When oil prices
fell below $120 a barrel in early New York trade last Thursday, a few
big companies that are major oil consumers started buying around $117.

It looked like a bargain. Brent
crude had been trading above $120 for a month. But the buying proved
ill-timed. Crude kept on falling.

were down millions by the end of the day, trying to catch a falling
piano," an executive at a major New York investment bank said.

before had crude oil plummeted so deeply during the course of a day. At
one point, prices were off by nearly $13 a barrel, dipping below $110 a
barrel for the first time since March.

descent followed the biggest one-day price drop in silver since 1980 on
Wednesday, after hedge fund titan George Soros was reported to be
selling. Exchange operators raised silver's margin requirements, making
it more costly to trade the metal and sending investors out of the
market. Silver plunged by 20 percent, more by week's end. The rout
unnerved some commodity investors.

just doesn't fall by 10 percent in the course of a normal day, though.
In commodities markets, oil is king, and its daily contract turnover,
typically around $200 billion, is usually able to absorb even large
inflows or outflows of investment.

rare moves of $10 a barrel usually are set off by dramatic events --
the outbreak of the first Gulf War in 1991, or the collapse in 2008 of
Lehman Bros bank, which both led to recessions.

Of course, there was major news last week. But the daring Pakistan raid that killed Osama Bin Laden had done little to shift the balance of oil markets on Monday.

interviews with more than two dozen fund managers, bankers and traders,
no clear cause emerged for the plunge in price. Market players were
unable to identify any single bank or fund orchestrating a massive sale
to liquidate positions, not even an errant trade that triggered panic
selling, as seen in the equities flash crash last May.

the picture pieced together from interviews on Thursday and Friday is
one of a richly priced commodities market -- raw goods have been on a
five-month winning tear over all other major investment classes -- hit
by a flurry of negative factors that individually could be absorbed but
cumulatively triggered a maelstrom.

Computerized trading kicked in when key price levels were reached, accelerating the fall.

"It was a domino effect," said Dominic Cagliotti, a New York-based oil options broker.

negative factors -- prominent cheerleaders turning bearish, some weak
economic data, cheap money from the U.S. Federal Reserve ending by July,
a lessening of political risk -- merely provide a backdrop for the
waves of selling. What stands out is the way computers turned
readjustment of positions in a huge and deep market into a rout.


large jolts from so-called stop-loss trading amazed market traders. The
automated sell orders were generated as oil crashed through price
points that traders had programed in advance into their supercomputers.
In many cases, computer algorithms sold for technical reasons, as oil
dropped through levels that, once breached, could trigger ever larger
waves of selling yet to come.

machine trading, based on subtly different but fundamentally similar,
algorithmic models, eliminates the white-knuckles and potential human
error involved in actively trading a volatile market, and increases
anonymity. Instead of breeding hesitation, abrupt price drops can
quickly prompt these machines to unload a bullish long position in oil,
and build up a bearish short one instead.

trading is one plausible thesis for another apparent market anomaly
that occurred on Thursday. Exchange data shows that the total number of
open positions in the oil market -- a number that would typically fall
in a selloff -- instead rose. Normally, panicky funds selling oil en
masse would cause total "open interest" numbers to shrink, as exiting
investors closed out contracts. But some machines, following the market
trend, may have gone further, by dumping long positions and quickly
amassing sizable short positions instead.

don't care. Momentum just increases until nobody wants to stand in
front of it," said Peter Donovan, a floor trader for Vantage on the New
York Mercantile Exchange.

Some big
Wall Street traders watched their own systems sell into the down trend
but couldn't know for sure who had initiated the selling spree. They
only knew that similar machines at other firms, from New York, to
London, Geneva and Sao Paulo, would be automatically selling in much the
same manner.

During Thursday's
crash, such selling locked in profits that high-flying commodities
traders have been accumulating for months. Some of Thursday's rout
appears to have been more a product of the wisdom of crowd computing
than of widespread human panic.

believe the magnitude of the correction appears in large part to have
been exacerbated by algorithmic traders unwinding positions," Credit
Suisse analysts wrote in a report.

High frequency trading and algorithmic trading accounts for about half of all the volume in oil markets.


of the seeds for the rout were sown earlier. In April. Goldman Sachs'
bullish team of commodities analysts, led by Jeff Currie in London,
issued two notes to clients in rapid succession recommending they pare
back positions. In one, the bank called for a nearly $20 dollar
near-term correction in Brent oil, while maintaining a bullish
longer-term outlook.

The closely
watched money king, George Soros, who runs a macroeconomic hedge fund,
had said for months that gold was pricey. Even online advisors to
mom-and-pop investors such as The ETF Strategist had warned of a bubble
in precious metals that could be ready to pop.

Wednesday, the Wall Street Journal had reported the Soros Fund was
selling commodities including silver, and four sources from other hedge
funds told Reuters they believed Soros was busy selling commodities
positions again on Thursday.

markets already had suffered four days of carnage and ended the week
down nearly 30 percent. But silver is a tiny market, much more
susceptible to sharp price moves. Some traders suspect that big holders
were cashing out of the least liquid commodity market first, before
moving onto the big one - oil.

crude crashed on Thursday, it dragged down every other major commodity.
The Reuters Jefferies CRB index, which follows 19 major commodities, was
on its way to a 9 percent weekly drop, the biggest since 2008.

Oil's selloff began in London, and accelerated as New York traders piled in.

routine report on U.S. weekly claims for unemployment benefits spooked
investors, showing the labor market in worse shape than expected. That
fed a growing pessimism about the resilience of the global economy after
industrial orders slumped in Germany
and the massive U.S. and European service sectors slowed. Then the
European Central Bank surprised with a more dovish statement on interest
rates than expected, signaling its wariness about the euro zone
outlook. The dollar rose sharply.

Before noon New York time, Brent crude oil prices were already trading down a jaw-dropping $8 a barrel.

hundred miles southwest of New York's trading floors, on Texas refinery
row, oil men were stunned by the drop, which played havoc with their
pricing models.

"It was nuts. Our
risk management guys were tearing up their spreadsheets," said a major
U.S. independent refiner, who asked not to be identified.

range of factors, both economic and political, were also at play. The
recent rise in raw goods has been fueled in part by the U.S. Fed pumping
cash into the markets by purchasing $600 billion in bonds. This program
has pushed interest rates extraordinarily low, making borrowing
essentially free once adjusted for inflation. Investors have been using
the super-cheap money to buy into commodity markets. But the Fed's
program is slated to end on June 30.

were likely to take profits before June when the direct (Fed) bond
purchases stop. All were eyeballing each other to see who would take
profits first," said a London-based oil trader.

the world's fastest-growing consumer of commodities, also is tightening
monetary policy to tamp growth rates and control inflation, raising the
prospect of a slowdown in demand for oil.

political risk premium built into oil prices also came under scrutiny
last week. The unrest sweeping through the Arab world - home to over
half of world oil reserves - has boosted oil this year. The only major
supply disruption so far is from Libya, where war has cut off at least 1
million barrels a day.

"We've been
in a world thinking there's more risk, more risk, more risk," said
Sarah Emerson of Energy Security Analysis Inc. "People took this week,
and the news of bin Laden's death, to simply reflect. They stopped and
said, maybe there's less risk."


all these factors together, and they amounted to a reason to sell.
Traders and brokers who spoke with Reuters speculated that macro funds
like Soros and others, which had been aggressively overweight
commodities, were cutting the portion of their portfolio allocated to
commodities. Because those positions had grown so large, even a small
rebalancing would amount to billions and billions of dollars in
contracts sold. After weeks of thin trading in Brent oil futures,
Thursday's trade volume hit a record.

Thursday, investment advisory firm Roubini Global Economics had also
joined the fray, telling clients for the first time in years to cut
commodities in their macro portfolios. Many funds were merely taking
months of handsome profits off the table.

Yet Thursday's rout certainly produced casualties.

the afternoon New York time, some of the world's biggest money managers
thought they smelled blood. Several banks and funds seemed to be
selling oil in an orderly fashion, even if the price drop was
extraordinary. But could a hedge fund be struggling for survival?

wondered whether any major commodities funds were on the losing end of
bullish oil bets, and were getting forced by margin calls from brokers
into dumping massive positions.

trader at a major bank in New York called a colleague at one of the
world's largest hedge funds. During the conversation, they exchanged
notes, suspicious that one or more commodities-focused hedge funds might
be facing a moment of reckoning, one of the participants said.

fund could be pinpointed. By the end of the day, the person said, they
were less suspicious -- a view shared by week's end by many market
participants who spoke to Reuters. No one was naming a major hedge fund
in dire trouble, or a computer trading algorithm that went haywire.

unlike last May's flash crash in equities markets -- when stocks fell
by a similar 9 percent margin in just minutes -- Thursday's decline came
in rolling cascades, playing out over at least 12 hours.

Even after Brent fell to settle around $110 by the end of the day, crude prices were still up 38 percent from a year ago.

prices have been advancing well beyond any reasonable measure of value,
Thursday's declines felt more like orderly corrections than chaotic
panics. There was no sense that anyone was ready to jump from the
window," said oil analyst Peter Beutel of Cameron Hanover in


day left some commodities-heavy funds nursing wounds - weekly losses of
10 to 20 percent, according to several fund managers who invest in
other hedge funds.

Two of the
sources said that London-based BlueGold, a fund known for taking
aggressively bullish directional bets on oil in the past, had sizable
losses. It was not immediately clear how much the fund dropped, and
BlueGold declined comment.

One money manager said of BlueGold's head trader Pierre Andurand: "He's had tougher weeks so I don't think it's game over."

sources also cited losses at $20 billion Winton Capital, of around 2.2
percent, on Thursday. FTC Capital, a $300 million European commodities
fund, lost 4 percent in one of its larger funds, the sources said.
Neither fund was available for comment.

the space of just hours, the drop in the price of crude oil had shaved
nearly $1 billion off the cost of supplying the world's daily oil needs.
That could be good news for gasoline consumers. But Eric Holder, the
U.S. Attorney General who has recently formed a government working group
to investigate manipulation in oil markets, had a blunt warning for oil
traders. He wants proof the savings are being passed on to end users.

working group was created to identify whether fraud or manipulation
played any role in the wholesale and retail markets as prices increased.
If wholesale prices continue to decrease, fraud or manipulation must
not be allowed to prevent price decreases from being passed on to
consumers at the pump," Holder said on Friday.

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TruthInSunshine's picture

The big flash crash in belief in even an ounce of competency in the government (including its proxies such as The Federal Reserve 'Bank' under stewardship of The Bernank) in 5...4...3...2...

SheepDog-One's picture

I think we're past the point where anyone tries to guess what happens next, now everyones just sitting and watching. Who is going to put up billions of dollar in commodities futures when at any moment you get -10% at the drop of a hat? 

Zero volume everywhere.

TruthInSunshine's picture

The Bernank says:

I am Shiva, god of death of free markets, and I will try to print to infinity, with fellow gods in the ECB, BOE, PBOC & BOJ, WHILE also crushing commodities and other alternatives to fiatski.

kushmere's picture

Guessing what happens next depends on how you see the players. What steps can major economic entities really take?

Japan: Irradiated and crumbling

Eurozone: Defaulting

BRICs: (not my area of expertise, maybe someone can help)

OPEC: (Also not my area of expertise)

USA: Debt & Biflation (and the fight over it)

traderjoe's picture

OPEC - how much longer do they want to stay in partnership with a crumbling empire and receive Bennie Bucks for the KEY resource against declining fields?

BRIC - how can they continue to acquire hard resources, minimize imported inflation, and keep teeming masses of upwardly mobile workers from overthrowing the government?

4realmoney's picture

Crashes like this - in all commodities, especially precious metals - are going to cause immense pressure in the markets to manage supply/demands. Silver Eagles premiums - on the low end are now $4 and they INCREASED after the price crash. It's insane. This cost comparison site shows what I mean.

disabledvet's picture

you mean "the difference between a bid and an ask has widened."  that's what i mean when i say "gold is the only thing where there is no market"--meaning "the difference between a bid and an ask" does not exist.  although it is interesting to think "the same is true of oil and treasuries."

Ruffcut's picture

IT is called the spread.

Spread growth can be created by games, lower volume and less liquidity.

Algo's are quite clever and will bow out when spreads become too wide. The best algos probably can go scalping in those conditions and will beat the piss out of other programs.

When smaller funds see this they try to get out all at the same time causing mini intra bar crashes and the market maker scalpers with privy rights to the mainframe box are doing god's work lapping up all the spilled milk.

Blame the computer like the drunk blames booze for his DUI.

RockyRacoon's picture

Blame the computer like the drunk blames booze for his DUI.

Right.  What's the deal here?  It's made to look like the computers built their own algos to trade this crap.   The stops were set by somebody -- not pulling a number out of a hat.  A stop algo created by another algo, ad nauseum, but, the culprit ultimately is the trader.   GIGO.

CPL's picture

Doesn't seem to be working that well.  All the air that was forced out in a pretend vaccum last week is rushing back in. 


Man I wouldn't want to be sitting in an ECU or Fed director's chair right now.


The HFT's might be running the trigger, but the human's are scooping it up.  That's always the problem with using a computer with a trigger.  Doesn't take much to force a false positive to provide the impedious to make an action happen.  Same thing happens with knuckle heads that bot online games in the attempt to farm gold.  Eventually the bot gets carried away and gets the user banned/gold taken away.

Bots are only good to notify, quickly calculate and by proxy give the person watching the signals the ability to make a decision.


The way these guys are playing with them, I'm not the slightest bit surprised that things like credit and margin are getting obliterated.  The deflationary spiral that the fed/ecu is trying to avoid has everything to do with the mechanics of the tools they are using.  Much like if you give booze to a grumpy man, you'll end up with an instant asshole.  Same goes for the tools.


plug in the basic assumptions of Keynesian logic on supply and demand, and the situation is a race to the bottom.  The Machine doesn't know any better, it's just doing what it's told, around 1 billion times faster than any human could ever do the same task in a day.  I'm waiting for the virus version of this...what an awesome idea.

Just an idea I'm throwing out there.  Since the knuckle heads running it all don't understand the flaw in use of the tools that are using.  Why not build a worm to help speed up the process.  They would never know they were infected, it would appear taht they are acting normally.  Get it to pull a superman stunt, add an extra penny of real captial to the transaction, credit deminishes every transaction, eventually "no money" in anyone's bank.


FED throws a couple trillion back out there to refinance, the HFT's repeat the process of "adding value" to the world, eventually run back down to zero.  Meanwhile even 0.001% interest looks like a bad idea taht can never be paid on Quadtrillions of dollars.  A nice side effect is the bond market (IOU) finally blows up properly.

Innocent Bystander's picture

The computer that went haywire and triggered this crash did so under specific instructions and is housed in the premises of the hedge fund with its own printing press... 

Algorithm inputs -- Short term, Strong $, crude below $100, a correction in PMs especially Gold before the next reload of Quick&Easy


RobotTrader's picture

With so many overzealous hedge funds on the ropes gunning the "Peak Oil" and "Shocking Dollar Crash" reading King World News, etc....

Uncle Gorilla now smells blood and will be implementing margin hikes soon to crush these speculators.

SheepDog-One's picture

Go ahead lets see that hillarious show play out! 'Gee I know, lets have a totaly fascist iron grip around the throat of all markets, anyone dares step in we pop their head off like a daisy!' 

YEA thats gonna work real well MomoFader! 

topcallingtroll's picture

Silver is showing impressive strength.

Looks like 100 dma was the bottom.


I may still change my mind. Bullish for now. Target $40

Johnny Lawrence's picture

I'd like to see it base out and consolidate before I feel comfortable calling the 'all-clear' signal.

Bob Sacamano's picture

The capitulation on Friday was evident and the bounce to hopefully $40 is a great AGQ trade.  Can re-evaluate if all clear once see how it behaves in that 38-40 range.

ThreeTrees's picture

Careful now, still gotta make it over and hold the 50MA support cum resistance.

Oh regional Indian's picture

The daring raid that killed UBL? Hah! This is Reuters after all. 

And hedge funds that went in hot and heavvy at a $3 drop deserve their losses. If the parabolic moveup is always followed by parabolic move down theory is correct. 


willien1derland's picture

I agree that Hedge Funds should take their losses, however, I would like to make two points please; (1) As a US Taxpayer, I would like only the small ones to take their losses as the TBTF Hedge Funds will be compelled to socialize their losses; (2) I would prefer these funds be renamed more appropriately; perhaps PLEDGE FUNDS as we all know that A.)Most Hedge Funds do not HEDGE (B) the Federal Reserve pledges to underwrite any losses on the backs of the U.S. Taxpayer

willien1derland's picture

 The AUDACITY of HFT Trading (for fun & profit) - The new book from Barack Obama - available from

doomandbloom's picture

i thot it was Waddell and Reed..

Don Birnam's picture

SkyNet again...where is John Connor when you need him ?

mspgrandi's picture

and here is what Clive used to say....

Bloomberg ID



bobby02's picture

What a fluff piece. I suppose stop-loss orders did exist before the advent of HFT. Risk management must have been invented last week. Nice of them to throw out all those possible causes for the sell-off - maybe one of them is right.

Also very defty moved from talking about 10% decline to $10 decline without mentioning that at the time of war in Iraq oil was around $20/bbl.

Man has the Internet has destroyed the fabled 4th estate!

gordengeko's picture

Well if they invested the farm at 119, how does 98 look?LOL

CPL's picture

I've often wondered that.  If these retards were any good they would have been eating this shit up when it fell to 70 a barrel with the rest of us.

max2205's picture

Obama told Ben to get crude down asap and he did...asap

kushmere's picture

While correlation does not equal causation, I do tend to agree with you on this one. It's funny actually. The president says he is going to do something about he price of oil, and he does!

Unfortunately, what he did was change the rules in the middle of the game. This kind of action tends to make other players pick up their cash and leave the table. 

Or, do enlightened minds think differently?

Yield2Greatness's picture

Oil is one of the biggest markets in the world.  Those computers sure are powerful.  I sure hope a bunch of Rogue PCs don't decide to suck all the air out of the world for a 3 day weekend.  So Scary...

Bob Sacamano's picture

I have found it is more profitable to trade the volatility rather than complain about it.  Not exactly shocking that things that go one direction for a long time tend to reverse at some point.  And everyone in the media will ascribe the cause of that reversal to whatever happened that day -- which is highly likely not the case -- but it does not matter.  

If you are a trader, embrace the volatility.  If you are a true investor, ignore the volatility.  But complaining about the volatility does nothing.  It does seem complaining about it is generally done by those on the wrong side of the market.   

Muir's picture

Yeap. +1


"It was nuts. Our risk management guys were tearing up their spreadsheets," said a major U.S. independent refiner, who asked not to be identified.

anti Oligarchy's picture

How would you trade volatility in oil specifically

Is there a specific symbol or are you doing strategies within commodity market?

CPL's picture

Sure, that's easy.

  1. take all your money.
  2. put it in a pile.
  3. make sure you panic about something (fuck!!  The sun's out)
  4. set money on fire.

That's how you swing trade commodities. were looking to be successful...


Oh that's easy, BTFD, make sure there is a dividend, leave it the fuck alone while it pays for itself.


I've been in WTI from 7 bucks after the first big crash.  I've had no complaints, it's paying for itself, it's tripled in value, done just fine.  Assholes keep trying to get me to do a buyback plan.  They reinvest my money back in at current market prices (not going to fucking happen.

CPL's picture


There pick one.  I'm not a big fan of companies in the energy sector btw, 99% are collosal lairs.  Most of the oil that happens today is straight up trading of arms or drugs for oil, somehow doubt Shell is going to be involved with that.  So if you want safety you work on the sector itself.  


Doesn't matter what shitholes like Exxon, GE, Shell, etc own.  The resource is the goal, the retail end is for chumps. 

Bob Sacamano's picture

Only leveraging 2:1 with double long and double shorts ETFs (sorry if I indicated trading volatility per se -- just trading in volatile markets where can make outsized returns) .  I understand all the problems with ETFs, but only using this for short term "trading money."   For example AGQ and ZSL (silver) have been good at tracking silver prices and 2x silver's volatility has produced very good returns.  It does require being on the right side of the market - no free lunches!  Easter Monday morning sold AGQ and bot ZSL, last Friday sold ZSL and bot AGQ -- very good returns. 

For "investing money" much more boring, yield / growth oriented long term focused where I can get might get 8-10% total return over the long run with below average equity risk.  Last 15 years has been 13% average annual return (solidly positive throughout that period except 2008), but that is not going to happen again going forward.  I have my share of cash and PMs for more disasterous scenarios. 


disabledvet's picture

obviously the best place to start with articles such as this is with simple dollar amounts in the market (volume+price.)  imagine being a trader in the physical silver market which has pretty much been somulent for decades.  within the span of a few months not only does the actual dollar value of the physical soar--but the volumes soar as well.  "it can get so big so fast it's a problem."  margins rates must soar as a result "lest there be a speculative blow-off" meaning huge volumes with huge price spikes "resulting in the annihilation of short only funds" and "for example various hedging strategies" say "shorting silver but going long copper."  unfortunately in all these "short vs long" debates the massive dollar amounts on the table have been lost in the discussion.  and so it is across all commodity classes which are by definition a "risk asset" since normally the dollar amounts in the asset class are quite small and therefore "put nothing at risk."  we now have 10 years of commodity price increases under our belt--with speculative blow-offs in mulitple sectors of the space (corn, wheat, oil coming in for a second pass)--therefore the so called "banksters" have to be careful with their margin rate increases.  why?  "they need the business" of course. (making money on the spreads, too?)  "they don't want to kill the price increase either" just "how that price increase impacts their business."  'tis true "the government is now claiming market manipulation"--but that's only in the oil markets which are basically incapable of manipulation because of the truly staggering size of the market.  ("is Saudi Arabia for or against the higher price of oil?"  they say they're against destroying the oil dependent economies--but then they do it anyways.)  anywho "we've seen this before" in the 70's--with amazing volatility in the resources space.  the word "glut" didn't start to appear until the 80's and "post Volcker."  why should we expect anything different now?

monopoly's picture

Tough to play markets run by computers. Better odds in Vegas. What a broken market this is. And America slowly dissolves into the abyss.

"Oil speculators" and not one iota of evidence that the govt. is going after "financial speculators". What a crock of shit this govt. is.

Bob Sacamano's picture

I speculate with every investment I make.  Am guessing so does everyone else.

Those on the wrong side of the market are mad, those on the right side of the market are happy.  I am trying to be on the right side of the market no matter what happens.  And if I am on the wrong side of the market, I am thinking that's my fault -- blaming someone else is not useful and generally not appropriate. 

Spartan's picture

parabolic up = parabolic down...but I guess that makes a boring Reuters article. 

Muir's picture


But we gotta complicate things mustn't we?

slewie the pi-rat's picture

crack that whip!  new euro carry trade (?) now putting commodities thru roof.  gas RBOB + 17, + 5.5%.  yen is kickin bEUooty!


Urban Redneck's picture

As big as the oil market is, it is tiny compared to the F/X market.

CrashisOptimistic's picture

There is a perverse sort of pleasure in seeing oil scarcity inexorably evolve.  All these flailing maneuvers are going to lose money for the players, and unlike for Every Single Other Item . . . there is nothing Bernake and Geithner can do about it.

No one can fix relentless depletion.  They and their families will die, like all the others.

Waterfallsparkles's picture

All I know is that you cannot make money in this Market.  Long, Short and especially trying to trade.  No one except the HFT Comptuers that are paid to trade and make a penny a trade can make any money.

The Market has just become like an electronic slot machine.  Where the house takes their cut right off the top and the more you feed in to the machine the more you lose.

Getting out of the Market for GOOD this time.  Tired of watching paint dry all day every day.  I can certainly make money other ways other than a rigged Casino.

WakeyWakey's picture

Nice to see the bots have ran into a brick wall of switched on humans who are only too happy to mop up the cheaper phsyical.

The one thing that does worry me is have they programmed a 'double dip' into the algorithm. Flash crash Silver, wait till everyone buys the dip, pushes it back to $49 then crash it back to sub $30.








citrine's picture

Interesting article.... On NYMEX on May 5-th Oil dropped from approx $105 to approx $101 in 25 minutes, then went up to approx $104 in approx 30 min. and kept trading up and down without sudden drops. I have always been under the impression that computers are much quicker than that ...