New York Stock Exchange
Last week's 90%-down day and TRIN (market-breadth) above 2.0 provided the ammunition for an oversold bounce but as BofAML notes, there is plenty of resistance to limit upside. With 1658 as critical resistance (S&P 500 cash traded 1651 this morning), the following charts show the weight of evidence suggests deeper downside risk to the June lows around 1560.
Nearly four years after Zero Hedge first suggested an HFT tax should punish algos that "churned" quotes and blasted empty bids and offers to stimulate "momentum ignition" strategies, and generally corrupt market structure in a way that lead to both the flash crash, the BATS IPO farce, the FaceBook IPO debacle and the Nasdaq 3 hour crash, the first such tax is now a reality. And while it is not, and likely never will be implemented in a major (if declining) exchange such as the NYSE or Nasdaq, the first country to finally put an end to millions of parasitic empty quotes is Italy.
The “Great Rotation” consensus is now under pressure. A “buyers strike” is suddenly visible in late August as investors see the potential for event risk in coming weeks. September is seasonally the weakest month of the year for risk assets and the S&P500 has not recorded an official “10%” correction in 2 years, so it is no surprise that US equities, in particular, are taking a bit of a breather here. But is there something more sinister at play than a healthy correction in risk assets? Conflict (policy, military), Rates (liquidity), Asia, Speculation (forced selling) and Housing are all potential catalysts for a much more contagious autumn market event.
Unsurprisingly NASDARK, while admitting to "latent software flaws" in the SIP,, choose to place the blame for causing the 'glitch' at the foot of the NYSE Arca...
- *NASDAQ HALT REPORT SAYS DATA FLOOD EXPOSED SOFTWARE FLAW
- *NASDAQ SAYS CONFLUENCE OF EVENTS 'VASTLY EXCEEDED' SIP CAPACITY
- *NASDAQ SAYS SOME ISSUES 'CLEARLY WITHIN' COMPANY'S CONTROL
- *NASDAQ:'UNPRECEDENTED VOLUME' OF MSG TRAFFIC TO SIP CAUSED HALT
- *NASDAQ: SIP RECEIVED OVER 20 SEQUENCES FROM NYSE ARCA
- *NASDAQ: SIP GOT INACCURATE SYMBOL QUOTE STREAM FROM NYSE ARCA
"Other issues contributing to the halt are more endemic to technology issues across today’s complex markets and will require a broader industry-wide effort to resolve... and will present our initial recommendations related to these changes to the SIP governing committee within 30 days." And here is Nanex's perspective.
- UN Insecptors to leave Syria early, by Saturday morning (Reuters)
- Yellen Plays Down Chances of Getting Fed Job (WSJ)
- JPMorgan Bribe Probe Said to Expand in Asia as Spreadsheet Is Found (BBG)
- No Section 8 for you: Wall Street’s Rental Bet Brings Quandary Housing Poor (BBG)
- Euro zone, IMF to press Greece for foreign agency to sell assets (Reuters)
- Brothels in Nevada Suffer as Web Disrupts Oldest Trade (BBG)
- U.S., U.K. Face Delays in Push to Strike Syria (WSJ); U.S., U.K. Pressure for Action on Syria Hits UN Hurdle (BBG)
- Renault Operating Chief Carlos Tavares Steps Down (WSJ)
- Vodafone in talks with Verizon to sell out of U.S. venture (Reuters)
- Dollar Seen Casting Off Euro Shackles as Fed Tapers (BBG)
With crude prices at multi-year highs and India promising to save its oil companies it is perhaps not entirely surprising that all the attention in this opposite world pushed the Energy sector (most notably the biggest names) to lead the market higher on low volumes today. Sadly, Chevron and Exxon accounted for 40 of the Dow's 48 point gain and the S&P energy sector gained an impressive 1.8% as the rest sat around close to unchanged (and Staples lower). Treasuries began selling off from the Asian open last night with the belly 6-7bps higher in yield on the day (-3-5bps on the week)... But 330RAMP was missing as all indices gave back considerable gains into the close with Trannies red (and S&P at its 100DMA again).
With AAPL plunging below the critical $500 level and equity markets slumping this morning, it seems appropriate to reflect once again on the cause of last week's NASDARK debacle. As Nanex so obviously points out in these charts, digging into market data before the Nasdaq blackout at 12:20 EDT on August 22, 2013, we came across several significant periods of extremely high quote volumes. By plotting the number of messages for each of the 6 multicast lines used by the Tape C SIP (Securities Information Processor), we discovered the quote blasts map directly to individual multicast lines. The 'line' carrying AAPL's ticker saw the largest and most egregious quote volumes (spamming perhaps) that eventualy ovehwlemed NASDARK's creeking infrastructure.
- Opposition figure: major decisions on Syria expected within hours (Al Arabiya)
- Syria challenges U.S. to "produce the evidence" that Assad regime launched chemical attack (CBS)
- British PM says world must act on Syria, weighs response (Reuters)
- U.S. Treasury to Hit Debt Limit in Mid-October (WSJ)
- U.S. could look beyond U.N. Security Council in any Syria strike (Reuters)
- Nasdaq, NYSE at odds on outage cause as SEC seeks facts (Reuters)
- Ackman’s J.C. Penney Sale Ends Failed Saga to Agitate for Change (BBG)
- Zandi, LaVorgna, Blinder, Rattner all is one con puff piece (BBG)
- Best Buy Founder Schulze Plans Stock Sale to Diversify Assets (BBG) - "diversify assets" = dump overpriced junk
- Zero Worship: Credit-Card Firms Compete With No-Interest Transfers (WSJ)
- Len Blavatnik wins $50m in JPMorgan lawsuit (FT)
- Danone Finds Yogurt’s All Greek as Oikos Chases Chobani (BBG)
A study carried out recently by Nature Climate Change took a look at and analyzed past and present floods in the world and was able to predict the future floods that will take place concerning 136 cities.
29 months after ramping his initial stake to over 39 million shares (and witnessing a collapse of the stock from Over $40 to under $13), Ackman has decided that enough is enough. Through a just filed Citi-sole managed prospectus, Pershing Square is set to sell his entire 39,075,771 share stake in the beleaguered firm. The stock price's initial plunge on the news was immediately met by an avalanche of algo-driven buying to enable those that can to escape quick but as we post, JCP is heading back to its lows. With an overall cost-basis in the mid $20s, this one will sting a bit.
When you add High Frequency Trading exchange 263 and High Frequency Trading exchange 264 (read all about DirectEdge over the years here), you get a whole lot of happy algos. It also means that MtGox is on its way to becoming the world's most stable exchange. We now expect the market to crash in celebration. We joke, of course, but if anyone trips over the BATS extension cord that sends AAPL under $500 and the NYSE Arca and NASDAQ shutting down again, we take no responsibility. Finally, in continuing the spirit of full transparency and openness of everything HFT-related, the terms of the transaction will not be disclosed.
- Bankers Brace for Fed Wind-Down (WSJ)
- A Veteran Saudi Power Player Works To Build Support to Topple Assad (WSJ)
- Gunmen shoot at weapons experts' vehicle in Damascus: U.N (Reuters) - as long as it's not drones
- ECB Council Members Split in Jackson Hole Over Rate Cuts (BBG)
- Fed Officials Rebuff Coordination Calls as QE Taper Looms (BBG)
- As Egyptians Ignore Curfew, Talk of a U.S.-Brotherhood Conspiracy (NYT)
- Pipeline-Capacity Squeeze Reroutes Crude Oil (WSJ)
- Lawmakers Probe Willful Abuses of Power by NSA Analysts (BBG)
- Indictments Expected in Alleged Trading Code Theft (WSJ)
- India’s ONGC takes Africa gasfield stake (FT)
- Capital Flight Drains Reserves as Rupee, Rupiah Fall (BBG)
- Banks scale back rates business (FT)
While none other than Meredith Whitney warned this morning (mere weeks after her most-bullish-on-banks-ever call) that big US banks' revenue model is unsustainable, we discover that the NYSE Amex Options exchange has decided to DK all of Goldman's "erroneous" trades from Tuesday morning's debacle. As The WSJ reports, this is quite a boon to the venerable Goldman Sachs who faced hundreds of million in losses had the trades stood. The fact that no one can ever touch the bank-that-shall-not-be-named should come as no surprise (unsustainable business model or not) and as the following 'story' suggests, perhaps they truly are 'untouchable'.
One of the most published academics on gold in the world is Dr Brian Lucey of Trinity College Dublin (TCD) and he and another academic who has frequently covered the gold market, Dr Constantin Gurdgiev have just this week had an excellent research paper on gold published.
They have researched the gold market, along with Dr Cetin Ciner of the University of North Carolina and their paper, ‘Hedges and safe havens: An examination of stocks, bonds, gold, oil and exchange rates’ finds that gold is a hedge against US dollar and British pound risk due to “its monetary asset role.”
It was a quiet overnight session, in which the Nikkei was catching up to USDJPY weakness from the past two days, while China dipped once more despite the NDRC's chief economist stating China may cut RRR or conduct more reverse repos in H2 to maintain stable credit as loan growth slows down (or in other words things go back to normal). In Europe ECB's Nowotny decided to undo some of Draghi's recent work when he said that "good economic news" removes the need for a rate cut which in turn pushed the EURUSD higher (and European exports lower), even as former Cyprus central bank Orphanides said the Euro crisis may flare up after the German elections. In the UK Q2 GDP came in slightly stronger than expected at 0.7% vs 0.6% Exp. letting the GBP outperform since a need for the BOE to ease, at least in the short run, is becoming less pertinent. In amusing news, Moody’s late yesterday put six largest U.S. banks on review as it considers the effect of evolving bank resolution policies under Dodd-Frank and international regulations. As such GS, JPM, MS and WFC may be cut.