Momentum Ignition In Theory And Practice

Tyler Durden's picture

We discussed the theory about the incessant stop-runs and 'momentum-ignition' that algos employ to suck retail dollars into their vortex. Now we have, from our friends at Nanex, a perfect example in reality. On the day of Facebook's IPO, when every man, woman, child, and rabbit with skin-in-the-game was hoping for this social monster to go to the moon and fix California's tax crisis, the algos were indeed hard at work all that day to try and ignite the IPO's failing performance. Sometimes, however, the magic doesn't work.



Charts: Nanex

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fuu's picture

But but but liquidity.

ZerOhead's picture

First spike 12:23, second spike 12:40 (17 min later), third 12:57 (17 min), fourth 13:14 (17 min), fifth 13:32 (18 min) and finally sixth 13:48 (16 min).

The SEC has determined that no suspicious trading patterns have occurred because the fifth spike took 18 minutes and the sixth took 16 minutes.

Investigation completed.

Muppet of the Universe's picture

NONONO, I watched facebook all day that day.  I remember exactly what happened.  I reviewed all the nanex charts.  Facebook was the biggest stock bubble I have ever seen.  It should be worth like 5-10 dollars, and it OPENED, at 45.

In the months leading up to the fb ipo, stocks that were remotely related to facebook, such as MS, znga, saba, bvsn, etc, were experiencing bubbles that made facebook look like nothing.

3-6 months before, and even up to 1 month before, related b2b and p2p business stocks were at all time highs, fueled by the expectation of fb as a bubble.  As we approached the day however, these stock began selling off in DRAMATIC fashion.  On the day of the IPO, all related stocks had plummetted.  the outlook for FB was extremely grim.  The trading group I was in was debating whether to use intrade to short FB stock, or whether to even buy it and then dump it, and if so, how soon to dump it?

Facebook's lack of crashing on the first day, was more of a dramatic success that cost hft traders BILLIONS, than it was a failure.  Bank traders lost billions on that day, all so the buy the bubble retards wouldn't be smashed on primetime television.

Facebook is the LEAST WORTHY EXAMPLE OF MARKET BULLSHIT EVER.  Its like pulling out the little jonny lost his fingers to an m80 so lets ban fireworks.  Facebook was the stupidly biggest bubble, and Zerohedge would be shitting BRICKS if hft algos hadn't launched insane buy commands, holding levels, and shutting down the nasdaq.  FFS, don't you see what could have happened if trading was to occur normally?  FACEBOOK WOULD HAVE HIT LIKE 5 10 DOLLARS FIRST DAY.  I can't believe the arrogance I'm seeing from zerohedge, to assume that the buy orders happening that day, were somehow benefitting all the big bank traders.

Glass Seagull's picture


Momentum ignition just hit the live cattle futures this morning. 


buzzsaw99's picture

They are doing the same thing in gold as we speak.

Racer's picture

Looks like trying to start a car that is broken

StoleYourMoney's picture

FB wasnt worth $38 then and it's not worth $27 now.

El Viejo's picture

The grapes of wrath being stored and awaiting the next big squash.

Cognitive Dissonance's picture

Houston SEC I think we have a problem.

johngoes's picture

Personally I think there's a reasonable solution to two issues today - instead of taxing income, why not charge a fee for every electronically submitted trade order. Although I don't quite understand the process it seems from what I've read here that there are lots of HFT orders fishing for price advantages and which are subsequently canceled. I propose a fee on every electronic trade. If the order is completed the fee for that order is refunded. Any canceled order results in forfited fee.

At that point the HFT algorithms would have to factor in the fee to calculate whether order sniffing is worth while and if the fee sufficiently onerous enough it would be reduced.

Someone explain why such a proposition hasn't made any headway? It certainly could make a lot of fee revenue. Oh, yes, both political parties got their balls snagged in the FIRE vise. Wouldn't want to loose your gonads setting that trap off!