This Is What Happens When Someone Is Desperate To Sell $750 Million Of Stocks

At 1532ET today (Columbus Day - with half the market absent), someone - apparently having waited to see if the almost 'ubiquitous' 330pm Ramp would occur - decided it was time to dump three-quarters of a billion dollars notional of US equity market exposure in 1 second. The results of this forced liquidation (or utter disregard for fiduciary duty) were as follows...

A complete collapse of all liquidity in the S&P 500 e-mini futures contract - the world's most liquid equity exposure vehicle...

The liquidity evaporation began at 15:32:37 after 4,492 eMini contracts were dumped in 28 milliseconds $ES_F $SPY

— Eric Scott Hunsader (@nanexllc) October 13, 2014

An instantaneous 9 point plunge in the S&P 500...

And total chaos in the S&P 500 ETF (SPY) which saw offers below bids for what is hours to liquidity-providing HFTs (who appeared to step away for coffee)...

This chart shows just 1 second of SPY trading (corresponding to the volume spike above)

As Nasdaq quotes fell dramatically behind reality...

Given that NYSE margin debt at record highs and investor net worth at record lows...

The vicious cycle feedback from any extended push lower on liquidations is more than a little concerning (and may well explain the aggressive VIX buying today - and massive inversion of the VIX term structure)

Charts: Bloomberg and Nanex and @noalpha_allbeta

Comments

[css1971]

.

[CHX]

750 m dump at once and market goes from 1881 to 1874 ? So what's the deal here ? That's a bird poop on the Titanic.

[barre-de-rire]

i juuuuust don't give a fuuuuuuck_{cough cough cough cough}

[geekz_rule]

combine this with last weeks "satan" symbol.. and we begin to see trends.. PTB dumping now?

[Last of the Mid...]

You all got the email about this week and the correction didnt you? Oh, wel. . . . nevermind.

[OhNo]

Zero shit become a cia nsa data base of trolls and miss direction,Vote me down zero heros

[Downtoolong]

No one controlling a trade this size in an illiquid market could possibly be dumb enough to do it as a mistake or an act of desperation. The only possible explanation is they are trading with intent to move the market down in their favor.

There are many possible ways they might benefit:

• To set a closing price for another pre-existing position, such as an OTC derivative contract priced off the index. This allows them to realize or book profits on one trade which exceeds losses on another.

• To create downward momentum at the opening of another regional market, i.e., dump here and cover there.

• To influence a correlated market, such as forex or a specific security which they want to establish a position in.

• ……

• …..

The point is, the specific reason doesn’t matter. They are trading primarily with intent to move the market level. That is the fundamental definition of Market Manipulation. It’s supposed to be illegal. If you or I did it we would go to jail.

[MeelionDollerBogus]

It was only a matter of time. I've been expecting this & a few more like it. The only event preceding it is when the insiders see enough pension + retail-retard + leveraged trades are in the same direction chasing the market up. Once that's true, market is slammed down. Like getting a cat to chase a laser-pointer.

[tommylicious]

I am offended by the use of the term "Columbus Day" in the first sentence.  "Indigenous Peoples Day" is the preferred nomenclature.