Who Knew What 50 Seconds Before The FOMC Release?

Tyler Durden's picture

Last time it was trading faster than the speed of light in gold and stocks. This time, 50 seconds before the FOMC statement was officially released to the great unwashed, Nanex notes that the market exploded with activity reaching levels higher than during the actual FOMC news release. As they show in the charts below, approximately $106 Million of SPY and 3,700 eMini Futures contracts traded in 1 second. Gold - while less voluminous - was just as berserko in the minutes and seconds leading up the news release. What is going on here?

 

See also this image of eMini liquidity during this time.

 

For clairfication, here is S&P 500 Futures price and volume... (1-second bars)

 

And Gold...

 

And Nanex shows the incredible surge in activity...

1. Trades per second in NMS Stocks and ETFs (2,200 of approximately 8000 symbols traded).
Note the peak occurred about 50 seconds before the FOMC announcement.



2. Dollars traded (thousands) per second in NMS Stocks and ETFs.
Note the peak occurred about 50 seconds before the FOMC announcement.



3. Symbols traded per second in NMS Stocks and ETFs.



Nanex Research

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overexposed's picture

All hail the MASH-EENS!

boogerbently's picture

Well, for one (500+), you know everyone in Congress knew.

Merry Christmas.....I mean , Holidays!

Hugh G Rection's picture

What?  Our "reprentatives" are faithful public servants...

SafelyGraze's picture

The Taper Explained

Here is how the taper works.

Fed buys fewer securities and fewer bonds.

Thereby reducing the flow of FRNs into the 'economy'

Thereby increasing the flow of FRN's into bonds and equities.

It's simple.

Still confused?

Okay, let's try again.

Supposed you are watering the garden.

You reduce the flow out of the hose.

Thereby increasing the rate that water saturates the garden.

Not getting it yet?

Okay, one last time.

You are peeing into the toilet. Or into a big bucket. Or even a jar.

After awhile, your flow begins to diminish.

Thereby increasing the rate at which you fill the toilet/bucket/jar.

Now it should be clearer how tapering increases the value of bonds and equities.

 

DeadFred's picture

Well put.  In any world except ours the taper should have caused equities to drop but they got ahead of the crowd and forced a rally. Bet it doesn't continue tomorrow.

Manthong's picture

Ok.. so if I get this right , it’s like a large conical plastic nozzle firmly inserted up my bottom part that, which when removed feels like a tapering of some kind and should provide a sort of relief?

Manthong's picture

so.. as a nozzle what happens when they decide a deluge of liquidity is required ??

Four chan's picture

its a good thing zh is on this because the sec is FUCKING asleep at the wheel.

AldousHuxley's picture

SEC is like the police.

they don't get behind the wheel or prevent bad drivers.

they show up after the crash.

 

 

Snoopy the Economist's picture

SEC doesn't show up at all unless Martha Stewart made a few bucks illegally

caShOnlY's picture

The Taper Explained - Here is how the taper works.

Great analogy.  Better yet the real way it works:   As long as the FED RES can produce FRN for free, they will and we will all still be shaking our heads.  When, not if, the day comes when they can no longer create FRNs for FREE....... you look at your "stack" and say "thank god".   Until then you have to laugh and stick with others that understand this or you will go mad. 

Trying to convince your bro-in-law and others who just bought (signed his name) the new GMC Sierra loaded with the finest appointments will drive you nuts!!   

When the "day comes" bro-in-law can work for your new business of digging holes in the ground to put the bodies of those who wouldn't accept their place in the third world.

boogerbently's picture

What I'm wondering is whether the DOW +292 day was because of the joy of the return to fiscal responsibility, or for the joy of the remaining 87.5% of the "punchbowl" !

pods's picture

The answer is much more simple than that.

It went up 292 because it can.

There is so damn much liquidity rolling around that place that all a big guy (with a gabillion in "reserves") has to do is throw out a big order before the release and they will get a stampede from some of the older, dumber algos.  Eddie Murphy and OJ futures were classy compared to what we have today.

Then they slip back out and crack the Bollinger.

To be around this den of thieves gets you what you deserve.

It will be a great day on earth when nobody listens to the government telling us how needed they are and we stop pretending that credit (created out of air and lent at interest) is money.

pods

bozzy's picture

Pitchforks and cranes soon please

ISEEIT's picture

To say it's artificial reality is no stretch. Anyone with even an inkling of the truth who isn't scared shitless must either have a much more shallow inkling than I, or vision fixed toward some point I'm unable to view. I do understand that it's really always been this way, artificial that is. The terrifying part comes in concluding that NEVER has it been so blatant, extreme, and comprehensive.

This 'bubble' isn't contained to the market, or even the financial system. Seems to me this 'bubble' encompasses very nearly ALL things. Fraud and corruption permeates the human construct of reality to the point of now fraud and corruption is ALL that remains. Truth of course still exist, but truth is now extremely dangerous and existing almost exclusively outside the bubble.

I tried to explain just the financial system, money creation (money is a LIE) yesterday to a couple of cognitively well equipped individuals at work. I felt like a fool even talking about it. As the words spilled from my mouth, my mind marveled at how silly and improbable the 'reality' of it actually is.

I wish I didn't know the things I believe I do.

stocktivity's picture

They probably think you're a wacko. Maybe all of us here on ZH are. After all ZH and the rest of the bears did miss this whole market rally that began in March of 2009. Almost a 5 year bull market now....probably the biggest of our lifetime. You can down arrow me but it's the truth. How many besides me would love to go back to march of 2009 with the SP at 666.

mvsjcl's picture

I feel for you... the same freaking way.

pods's picture

You have reached a classic point that many of us here have reached. You know things and want others to know them too.  But when it comes out to someone who is clueless, they just look at you with a foggy look.

Think of how long it took for you to get your mind around this (fractional reserve banking, creating credit and pretending they are loaning you money, etc).  For me, it took a while of active searching and active learning to figure this out.

Now realize that a vast majority of people are merely wanting comfort in life, not reality.  Reality is on TV and they are called Reality shows.  

Everyone feels isolation, anger, frustration, depression (for me at least).  Just try and realize that you are ahead of 90% of eveyone else out there in terms of critical thinking and accepting reality. Also realize that you are never done learning and always entertain that what you "know" is incorrect. That is how you maintain thinking and avoid believing.  

Good luck, and rejoice, for you are way ahead of those around you.

As an aside, I ONLY speak about these things to those who are searching themselves.  Not to people generally. In this way, life really is like the Matrix.  People won't want to accept that their reality is false, and will fight to protect it.  And the older you get, the more difficult it is to change, as you move from accepting something as fact to the realm of belief.

pods

razorthin's picture

Fiscal??  You mean Monetary.  And no, there is no monetary responsibility until they get the fuck out of the way completely and let the market pay me 5% on my savings.

And no, there was no joy, just delirium and short covering.

stocktivity's picture

50 seconds in algo time is an eternity

Vice's picture

Nanex simply is wonderful

 

Truth lies in the numbers

LetThemEatRand's picture

"Truth lies in the numbers"

I'm so stealing that line.  Good one.

asteroids's picture

The significance is that people don't trade without knowiing what they are doing. Why would you bet millions on an uncertain outcome? You wouldn't. Obviously the FED leaked out what they were doing and someone front ran the market. It's immoral, but what the hell, the FED has been acting immorally the last 100 years and it doesn't seem to bother too many people.

LetThemEatRand's picture

“Everyone sees what you appear to be, few experience what you really are.” 

Niccolò Machiavelli, The Prince

Peachfuzz's picture

"I don't mean to sound sleazy, but tease me, I don't want it if it's that easy." Makaveli the Dawg

NeedleDickTheBugFucker's picture

A simple wealth transfer.

arkel's picture

Don't worry. None of this will be looked into. In case you were wondering.

CognacAndMencken's picture

 

 

If you're implying that the SEC and federal prosecutors are lax on insider trading, you're wrong. The SEC brought 58 insider trading actions in FY2012 against 131 individuals and entities.  Over the last three years, the SEC has filed more insider trading actions (168 total) than in any three year period in the agency's history.* Busting traders for insider trading is exceedingly difficult because the vast majority of insider trading evidence is circumstantial. SRO's (self-regulatory organizations like the NASD and various exchanges) have market surveillance and enforcement operations, but making the connection between a company insider and a random trader who is in possession of material, non-public information is almost impossible without an informant. The Mark Whitacre's of the world are few and far between.  

In 2013, the SEC has had some huge profile victories. Prosecutors have gone after the largest bank in the United States (Chase just agreed to a $13B fine) and they've also effectively shut down one of the largest, most profitable hedge funds on Wall Street - SAC Capital. SAC's star trader and Steve Cohen's closest trader, Michael Steinberg, was just found guilty of insider trading today by a Manhattan jury. Cohen - maybe the biggest whale on the Street - is getting closer and closer to being check-mated by the Feds, as well. 

Should there be 10X more convictions and prosecutions?  Probably.  But at the same time, you guys decry a bigger government, so how do you square this?  You want everyone caught, yet you don't want the SEC to be operational.

* https://www.sec.gov/spotlight/insidertrading/cases.shtml

By the way, Mark Cuban won his case against the SEC, and everyone in Texas cheered for him. 

 

cj51's picture

(cough) Bernie Madoff (cough)

exactly what is ur job at the SEC Cognac?

 

bozzy's picture

This is a wind up right? Which syllable of "Nanex" is causing the problem?

fiftybagger's picture

At least the SEC stopped picking their noses long enough to find out who bought those put options on the airlines before 911 right?

Go back to surfing porn and calculating your government pension.

SoilMyselfRotten's picture

Not to mention the long list of banksters who went to jail<cough>

Waterfallsparkles's picture

I would like to know who bought call options prior to the FED announcement.

brightdayfin's picture

Ok, so the SEC has some successes.  BUT, they are selective.

Consider Bernie Madoff, an RIA which raised $36,000,000,000 from victims:
1.  RIAs must file a monthly report to the SEC with their investments in inventory as of the end of the month.
2.  Every month, he sent statements showing stocks bought and ALL sold during that month.
3.  With nothing in inventory, no reporting to the SEC!
4.  AND the SEC didn't suspect anything? 

Not hard to imagine they might have been in on it!

Like many of the other alphabet government agencies, sometimes they get it right which helps their facade.

Also, what happened to the 300+ SEC investigations underway in WTC7?

 

"Incompetence or conspiracy?  Impossible to know without being on the inside."

nanex's picture

re: Mark Cuban. 

 

The SEC gave the crooks at Mamma.com a get out of jail free card so they could go after Cuban, not because Cuban did anything wrong, but because the prosecutor had a personal problem with his wealth. Read the damn rap sheet on Mamma - it's a freaking eye-opener. Why the hell did the SEC waste valuable resources and time on that case? The prosecutor and anyone involved in pushing that case forward should be looking for a job right now.

dick cheneys ghost's picture

coffee is for closers.........

~~~

razorthin's picture

Explodes higher at market highs on tightening (yes, it's tightening).  Yeah, that's sustainable.  Let's see, market ascent has been 70 degrees on the monthly, and now this ridiculous counterintuitive move.  Can you say "blow off"??

disabledvet's picture

I think this move by the Fed was a surprise. It certainly surprised me...and the market reaction was even more surprising. (don't buy treasuries, take stocks to the moon, gold is worthless. wow, the very definition of rational response.) The more interesting spike was the one many hours before the release. Obviously if you're not trading on inside information then you're not trading. http://en.wikipedia.org/wiki/More_Money_Than_God "the first rule is that there are no rules. the second rule is remember rule number one." having said that the very definition of risk is "that which cannot be quantified by the risk division because the numbers are too big and move too quickly in both price and direction." (in this case higher.) of course the irony that hedge funds have been by far the worst performer since 2008 is not lost on me. http://www.youtube.com/watch?v=5ZR3eSSPX9w

Seize Mars's picture

disabled

"I think this move by the Fed was a surprise."

Goldman, JPMorgan and others are the FED. This script is written on Wall Street and then handed to the FED. They are not "surprised" by the outcome, they wrote it.

FieldingMellish's picture

News flash! No one really cares anymore...

thecoloredsky's picture

Literally no one cares. Does anyone you know even have a clue what the federal reserve is? Everyone this Christmas holiday should write IOU notes on a piece of paper and hand them to their loved ones. Write "This note is legal tender for all debts, public and private." Make sure you draw a dead grandfather on the paper in teh best artistic way you can. Then wait for the response.

ghengis86's picture

When do you tell your beloved that they owe you interest on that paper you just gave them?

happel's picture

Thank goodness Mary Jo has this under control, folks. 

 

Al Huxley's picture

They probably just had a REAL STRONG FEELING about what the statement would be, and felt compelled to act 50 seconds before the release.  Some people are just naturally lucky that way.

Wahooo's picture

They wouldn't do that.