NASDAQ

Gotta love those closing price targets, which were achieved to the penny. As for the market, the no volume meltups are once again back in vogue, as the ES and SPY both trade at two week low cumulative volumes.

As readers will recall, yesterday we highlighted the HFT-driven flash crash in Core Molding (CMT) after an algo very obviously went insane and took the stock price to $0.0001 in the span of one second. Today, courtesy of our friends at Nanex, we get a transposition of the events at 14:19 in all their visual glory, together with a succinct explanation of everything that went wrong.

A chart from Bespoke Investment Group demonstrates why Steve Jobs better pick his words very, very carefully. As AAPL accounts for a 20.1% weight in the Nasdaq, and is an HFT darling, as well as having every analyst on Wall Street loving it, should this stock tumble, we expect an 80 point ES drop in the market by EOD.

The Liberty 33 folks succeed in breaking the Nasdaq's 12 day losing streak in a 10 minutes no holds barred, rabid buying spree. The market is once again fully credible.

The latest confirmation of the stock market bubble comes from Sentiment Trader which points out that yesterday's Nasdaq TICK almost passed an all time high, yet settled down...to 8 year high levels. As ST points out: "There were only three other dates that even come close to the current extreme: October 4, 2001: The NDX was coming off a major low, but still backed off for 3 days before rising again. May 2, 2002: The NDX dropped hard for the next 3 days. May 15, 2002: The NDX managed to rise a bit for the next 2 days, then rolled over into a major decline. Since then, the TICK hasn't managed to get above +4000 at any point, even intraday, much less to the +5300 level it closed at yesterday. Truly remarkable." Ben Bernanke has now succeeded at convincing virtually everyone that moral hazard is the right approach to dealing with an insolvent financial system. And for another indication of just how overbought the market is, Sentiment Trader also points out that the equity-only Put/Call ratio dropped to 0.32, the lowest reading since January 16, 2004, which on a relative basis is 45% below six-month average. The conclusion: " That, my friends, has never happened before (at least going back to 1997)."

A major component of HFT, server co-location, is now becoming a critical regulatory hot topic. The SEC has told the Nasdaq it will regulate its co-location business going forward. This is occurring even as the SEC is furiously googling terms like co-location and high frequency trading, and watching riveting debates between Michelle Caruso Cabrera and Bob Pisani, to find out just what they mean, and what exactly it is they are supposed to be regulating.

Some technical market observations courtesy of an insider. Alas, it is computers run amock as usual, so nothing else matters.

The Nasdaq, which recently was quite vocal in its condemntation of Flash orders, yet forgot it offers Flash orders itself, has taken matters into its own noble hands (and luckily out of those of the SEC's chairwoman). From a just issued press release:

Zero Hedge would like to extend the invitation by Joe Ratterman to other critical Flash markets, such as Dark Pools of "Liquidity" and most specifically, Sigma X.

Now that Goldman and the NYSE's Supplemental Liquidity Provider program have finally attracted a critical mass of necessary (and hopefully sufficient) public attention, Zero Hedge would like to readdress an overlooked complaint in which none other than the NASDAQ Stock Market LLC vociferously blasts the NYSE, the SLP program, and some of the underlying assumptions. Zero Hedge has discussed this issue extensively in the past, yet neither the SEC nor the NYSE (essentially, FINRA) seem to have ever addressed any of the NASDAQ's concerns. Zero Hedge believes the time has come for the later two regulatory organizations to provide some feedback to NASDAQ's concerns.