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Broken Market Chronicles: Algos Gone Autosell Wild - Video Explanation Of What Happened

Tyler Durden's picture





 

Still scratching your head over what happened this morning (this would be everyone at the SEC but not their porn webstream vendors - even they by now realize just how broken the market is)? Don't be  - courtesy of Dennis Dick and Premarket Info, here is a 20 minute video explanation parsing the tape and showing precisely what happened that impacted nearly 150 stocks.

In summary:

  • Rogue algo strikes number of stocks: up to 148 symbols impacted
  • WFC preferred security JWF trades 4.9MM shares, and trades down more than 10%
  • VZ, PEP, RSH, BBY, WFC and many more all affected
  • Appears to be an auto buy program error on some issues
  • An auto-sell program on other issues

And since nobody at the SEC will move a finger to fix what we have been pounding the table on since April 2009, we can only hope that we get more and more increasingly more ridiculous market swings such as this one which will finally get absolutely everyone out of the markets. Even the vacuum tubes.

And for those curious, here is the list of 140 stocks that were BATSed, straight from the NYSE.

 


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Wed, 08/01/2012 - 12:02 | Link to Comment malikai
malikai's picture

$5 says PPT is holding up SP right now.

Wed, 08/01/2012 - 12:04 | Link to Comment overbet
overbet's picture

Just watch KCG stock price to know if they are gonna bust or not. Its a good hedge

Wed, 08/01/2012 - 12:18 | Link to Comment Precious
Precious's picture

The County Coroner has examined the corpse and it is indeed dead. 

Wed, 08/01/2012 - 12:22 | Link to Comment The Big Ching-aso
The Big Ching-aso's picture

 

 

Is there an Egyptian involved & has it been violated?

Wed, 08/01/2012 - 12:24 | Link to Comment notbot
notbot's picture

Love the parting comment: "Don't use stop orders, that's the moral of the story"

Wed, 08/01/2012 - 12:31 | Link to Comment lineskis
lineskis's picture

Ah, those summer interns... You've got to love'em... xD

Wed, 08/01/2012 - 12:52 | Link to Comment Tippoo Sultan
Tippoo Sultan's picture

"...here is the list of the 140 stocks..."

Manchester United isn't on that list ?

Wed, 08/01/2012 - 14:36 | Link to Comment LFMayor
LFMayor's picture

Islam means Piece.

Wed, 08/01/2012 - 12:25 | Link to Comment slaughterer
slaughterer's picture

With the help of KCG, good day to start shorting WFC. WFC stock will never get beyond $35.  

Wed, 08/01/2012 - 12:03 | Link to Comment vinu02
vinu02's picture

Its low volume rally look at this chart http://www.freefdawatchlist.com/p/stock-chart-analysis.html 

Wed, 08/01/2012 - 12:04 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Selling to be outlawed in 3...2...1...

Wed, 08/01/2012 - 12:05 | Link to Comment RobotTrader
RobotTrader's picture

Maybe Bernanke suffered "premature ejaculation" today prior to the FOMC, by attempting to blow Wells Fargo shorts out of the water and trigger a runaway breakout in some key financial names.

Or maybe this is a warmup for some type of "shock and awe" intervention, so that Bernanke doesn't get embarrassed by a 3rd market selloff after his "Pie Hole" comments emerge during the FOMC chatter.

Wed, 08/01/2012 - 12:06 | Link to Comment slaughterer
slaughterer's picture

Robo, was that you "putting the boner to" GMCR just a few minutes ago?

Wed, 08/01/2012 - 13:08 | Link to Comment alien-IQ
alien-IQ's picture

he's a catcher, not a pitcher.

Wed, 08/01/2012 - 12:05 | Link to Comment Jlmadyson
Jlmadyson's picture

Flashy crashy baby!

Wed, 08/01/2012 - 12:14 | Link to Comment cowdiddly
cowdiddly's picture

Ah. Stuxnet comes home.

Wed, 08/01/2012 - 13:51 | Link to Comment mendigo
mendigo's picture

Those charts looked like bot love-making.
Wore me out thinking about it.

Wed, 08/01/2012 - 12:05 | Link to Comment PicassoInActions
PicassoInActions's picture

android vs IOS while Samsung is copying.... the algoritm for copying messed up all those stocks.

Wed, 08/01/2012 - 12:05 | Link to Comment MsCreant
MsCreant's picture

When algos go wild, that means they show their boobs, right?

Wed, 08/01/2012 - 12:09 | Link to Comment nonclaim
nonclaim's picture

They show the boobies at SEC, no less.

Wed, 08/01/2012 - 12:24 | Link to Comment MsCreant
MsCreant's picture

Must be Mardi Gras. Boobs everywhere!

Wed, 08/01/2012 - 13:33 | Link to Comment RockyRacoon
RockyRacoon's picture

This is a special occasion.  No regular old beads -- a string of pearls.

Wed, 08/01/2012 - 12:06 | Link to Comment Hype Alert
Hype Alert's picture

Rogue = exposes the gig and brings too much focus.

Wed, 08/01/2012 - 12:06 | Link to Comment Ralph Spoilsport
Ralph Spoilsport's picture

Too many "tech glitches" Bitchez. Something's up.

Wed, 08/01/2012 - 12:15 | Link to Comment Hype Alert
Hype Alert's picture

Yes, it's a rigged market.  It can't get any more obvious.

Wed, 08/01/2012 - 12:08 | Link to Comment optimator
optimator's picture

deleted

Wed, 08/01/2012 - 12:09 | Link to Comment LawsofPhysics
LawsofPhysics's picture

make sure you hold physical assets of real value and actual know the real value of your labor?  Turning japanese indeed.

Wed, 08/01/2012 - 12:12 | Link to Comment francis_sawyer
francis_sawyer's picture

My services as a web page designer for pet grooming salons is sure to command top dollar in the new paradigm...

Wed, 08/01/2012 - 12:08 | Link to Comment insanelysane
insanelysane's picture

MSM is saying only a few stock symbols.

 Nothing to see here.  Move along.

Wed, 08/01/2012 - 12:08 | Link to Comment bob_dabolina
bob_dabolina's picture

Some people on ZH says this is good. No BS.

Wed, 08/01/2012 - 12:08 | Link to Comment Benjamin Glutton
Benjamin Glutton's picture

Algo mulligan bitchez!

Wed, 08/01/2012 - 12:18 | Link to Comment Hunter S. Thompson
Hunter S. Thompson's picture

Made a trading mistake, thats okay Algos get a do-over

Wed, 08/01/2012 - 12:18 | Link to Comment Hunter S. Thompson
Hunter S. Thompson's picture

Made a trading mistake, thats okay Algos get a do-over

Wed, 08/01/2012 - 12:20 | Link to Comment The Big Ching-aso
The Big Ching-aso's picture

 

 

Fyi.   You're only allowed 2 posting do-overs.

Wed, 08/01/2012 - 12:45 | Link to Comment FoxMulder
FoxMulder's picture

I'm gonna go get the papers, get the papers.

Wed, 08/01/2012 - 12:09 | Link to Comment francis_sawyer
francis_sawyer's picture

It's just a little after dinner mint...

Wed, 08/01/2012 - 12:10 | Link to Comment ericfoster3
ericfoster3's picture

is this what it looks like when two algos go head to head against each other?  Can't wait for the Algo Battle Royale, only on pay per view!

Wed, 08/01/2012 - 12:14 | Link to Comment Money 4 Nothing
Money 4 Nothing's picture

My best Tommy Boy impression...

"Unplug the Godamn thing!! For the love of Christ!!"

Wed, 08/01/2012 - 12:12 | Link to Comment Nid
Nid's picture

Presumably, the algo-master was not previously long 3 million shares of AWF...so once again, a clear example of Naked Short Selling (illegal).... which of course, doesn't actually exist and is just a paranoid delusion.

Wed, 08/01/2012 - 12:56 | Link to Comment Captain Benny
Captain Benny's picture

Agreed - I highly doubt the seller even had the shares to sell such a quantity.  I highly doubt they preborrowed that amount either.

Now we also must question -- Who the hell would jump in and backstop that trade with that quantity of buy orders?  No market maker will back AWF that much -- its way too much risk on their books.  This whole thing is a fraud.

Wed, 08/01/2012 - 12:12 | Link to Comment JustObserving
JustObserving's picture

Bring back the Uptick rule.  But since the SEC is owned by the algo trading firms, it will never happen.  

This sustained selling is a regular feature of the silver and gold manipulation.

Wed, 08/01/2012 - 12:17 | Link to Comment LawsofPhysics
LawsofPhysics's picture

We have a winner!  PMs have been bad, they must be punished.  Moreover, commodities also need to be suppressed. 

Wed, 08/01/2012 - 12:14 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

 

one can only hope it is only another episode of: theChroniclesOfTheShitfacedGolfer/Traderz

Wed, 08/01/2012 - 12:15 | Link to Comment Rainman
Rainman's picture

SEC is throwing in the towel on money fund reforms. Little guys beware of your cash...big guys will be out at a buck before shtf

http://www.bloomberg.com/news/2012-08-01/money-funds-seen-failing-in-crisis-as-sec-bows-to-lobby.html

Wed, 08/01/2012 - 12:40 | Link to Comment onebir
onebir's picture

Hey, anything else is socialism (<-Tyler)...

Wed, 08/01/2012 - 12:16 | Link to Comment Turin Turambar
Turin Turambar's picture

Hmmm, sounds like it's time for the market to break to the UPside again.  ;-)  LOL, what a joke.

Wed, 08/01/2012 - 12:17 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

it's brianSack test-driving his new fuking 'edsel'?

Wed, 08/01/2012 - 12:17 | Link to Comment Dr. Engali
Dr. Engali's picture

It will be interesting to see who gets Corzined In this mess

Wed, 08/01/2012 - 12:19 | Link to Comment The Big Ching-aso
The Big Ching-aso's picture

 

 

Relief. We know they know what's causing these problems.  Now back 2 the Olympic Badminton results....

Wed, 08/01/2012 - 12:19 | Link to Comment Jake88
Jake88's picture

What no names? Are we protecting the innocent?

Wed, 08/01/2012 - 12:21 | Link to Comment poor fella
poor fella's picture

Only wish the lot size was 10k, 5k or even 1k.

Market armageddon would have ensued and Bob Pisani would have been screaming literally..

Looks to me like somebody laid their arm on the keyboard while they were in a real interesting half-hour conversation. "What is that damn beeping?!?"

Wed, 08/01/2012 - 12:21 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

if timmah were still with herr finiMiniSchewobble, they would be having wheel-chair races with hookers over this

Wed, 08/01/2012 - 12:22 | Link to Comment Fix It Again Timmy
Fix It Again Timmy's picture

The guy who was supposed to be watching this algo was getting a bj from an intern in an air-handling closet.  The most expensive bj in history...

Wed, 08/01/2012 - 12:30 | Link to Comment Trichy
Trichy's picture

Yes, problem guy getting bj, algo is fine, need more algos, ban bjs

Wed, 08/01/2012 - 12:31 | Link to Comment Jlmadyson
Jlmadyson's picture

Love the piece by Fox quoting a trader:

"The algos went nuts this morning. Someone has a major, major problem on their hands."

Indeed they do.

P.S. See the Drudge headline. Great stuff.

Crap he changed it. Had a 1940s poster of a woman flexing saying We Can Do It. Underneath; Federal Deficit Highest Since 1940s.

Wed, 08/01/2012 - 12:28 | Link to Comment SMFStreetTrader
SMFStreetTrader's picture

NYSE Listed Halts High Frequency Trading as Algorithms Runs Rampant http://www.youtube.com/watch?v=0gMbuJsbhac&feature=g-all-u

 

Wed, 08/01/2012 - 12:29 | Link to Comment SoNH80
SoNH80's picture

O.K. Computer

Wed, 08/01/2012 - 12:30 | Link to Comment Venerability
Venerability's picture

Force Yahoo to investigate the (very few, always active) Botnets which people the Yahoo Finance boards - and you'll quickly get to the bottom of everything.

I believe these Botnets, if investigated well and thoroughly enough, would be found to be "run" by just a handful of mostly Asian HFTs, in turn linked to various Organized Crime entities.

Of course, Mitchell and Byrne have been saying something like this for years. But Yahoo could actually DO something about it, if it chose to cooperate with international police authorities.

 

Wed, 08/01/2012 - 12:42 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

I demand an inquiry into Yahoo Finance!  Headed up by Bart Chilton & Jay Rockefeller.  This damn world wide web pages must be stopped!

Wed, 08/01/2012 - 12:44 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

slewie intel indicates that "yahoo" has been completely hacked by rooskie mobsters vacationing on the jersey shore

they may control you too...

Wed, 08/01/2012 - 12:50 | Link to Comment fuu
fuu's picture

I see what you did there.

Wed, 08/01/2012 - 12:32 | Link to Comment PaperBear
PaperBear's picture

How many of these trades were naked short sales, I wonder.

Wed, 08/01/2012 - 12:32 | Link to Comment optimator
optimator's picture

The banks are up today, are they expecting a gift from their buddy B.

Wed, 08/01/2012 - 12:33 | Link to Comment alien-IQ
alien-IQ's picture

the fact that the term "rogue algo" is even part of the lexicon of todays market should be more than sufficient evidence to prove just how broken the market is.

Wed, 08/01/2012 - 12:49 | Link to Comment Trichy
Trichy's picture

or we might just be living in the year 1983

Wed, 08/01/2012 - 14:02 | Link to Comment Nobody For President
Nobody For President's picture

You mean 1984, of course...

Wed, 08/01/2012 - 12:33 | Link to Comment schatzi
schatzi's picture

THIRTY FUCKING MINUTES! un-fucking-believable.

Wed, 08/01/2012 - 12:34 | Link to Comment Ralph Spoilsport
Ralph Spoilsport's picture

These technical fubars are doing a great job restoring confidence in the market, as in everyone is confident that the market is a corrupt ponzi scheme.

Wed, 08/01/2012 - 14:04 | Link to Comment Nobody For President
Nobody For President's picture

New memes: 'rouge algos', 'technical fubars' - DAMN, what a great age we live in.

'Technical Fubars' is a plus 10

 

Wed, 08/01/2012 - 16:54 | Link to Comment silverserfer
silverserfer's picture

ameritrade trade with confidence bitch. Get 10 free trades stopped out per month. bitch

Wed, 08/01/2012 - 12:42 | Link to Comment Hype Alert
Hype Alert's picture

What's real?  What's not?

Just because one of the machines that display red and green numbers went off today, there are questions.  What about all the other red and green numbers that are displayed before people?  Seriously, what confidence can there be in any of the numbers that are flashed before us?

 

What's funny is the conclusion in that video is to not use Stop orders and they should of had a panic off switch?  So, most have known for a long time not to use market orders and now (actually for some time) don't use stop orders.  Here's the next logical question, why use limit orders if the numbers you're watching are just bait and switch prints from some HFT?  Really, the joke is no one pulled the plug?

Wed, 08/01/2012 - 13:40 | Link to Comment scatterbrains
scatterbrains's picture

My visual is JPM trading desk A is selling xyz stocks to JPM trading desk B, the bid and ask both from JPM and both created out of thin air. As they push the xyz up and down, maybe getting creative and trying to trace patterns out of the zig and zag, at the end of the day JPM has not gained or lost unless some fool comes along to buy xyz stock, then they HFT that dumb ass at what ever the fake trading level is for the day and on and on as ever fewer clueless dumb asses are around to throw their hard earned savings into the wood chipper.

Wed, 08/01/2012 - 12:34 | Link to Comment Deathrips
Deathrips's picture

add UVXY to the list.

Wed, 08/01/2012 - 12:36 | Link to Comment Deathrips
Deathrips's picture

Time to pack up shop.....?

Wed, 08/01/2012 - 12:36 | Link to Comment TahoeBilly2012
TahoeBilly2012's picture

I don't get this, isn't there a minimum transaction fee for trades? Wouldn't that solve all this BS?

 

Wed, 08/01/2012 - 15:21 | Link to Comment jackinrichmond
jackinrichmond's picture

why should humans have to pay to trade and algos don't ?  

 

Wed, 08/01/2012 - 12:37 | Link to Comment buzzsaw99
buzzsaw99's picture

just a glitch in the matrix

Wed, 08/01/2012 - 12:43 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

just a glitch in the matrix. 

wait,

Wed, 08/01/2012 - 12:41 | Link to Comment Getting Old Sucks
Getting Old Sucks's picture

LOL, I think they're just testing out a new defense.  From "I don't know how the customer funds got co-mingled" To " Our computer screwed up and co-mingled the customer funds.   

Wed, 08/01/2012 - 12:47 | Link to Comment Quinvarius
Quinvarius's picture

One thing is for sure. Someone's clients are going to pay for that prop mistake.

Wed, 08/01/2012 - 12:47 | Link to Comment max2205
max2205's picture

bullish

Wed, 08/01/2012 - 12:48 | Link to Comment augustusgloop
augustusgloop's picture

welcome to the world of junior miners

Wed, 08/01/2012 - 12:49 | Link to Comment fuu
fuu's picture

I feel bad for those of you who have to be in this market.

Wed, 08/01/2012 - 13:32 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

shoot first,  feel sorry later...

Wed, 08/01/2012 - 12:54 | Link to Comment libertus
libertus's picture

Don't be a bunch of dumbasses. 3 min before 4 the race to the exits happened. Then today they just stop trading in all kinds of stocks...This is the crash, but many people will not realize it because the prices are being held up by the FED. If you try to exit from large positions you will be prevented by any means necessary. 

Its over. If your not in cash or gold your screwed. This market is but a dream. 

Wed, 08/01/2012 - 12:57 | Link to Comment FRBNYrCROOKS
FRBNYrCROOKS's picture

Chinese hacking? wtf? LOL listening to this. They better make these trades stick! Was it Knight Capital? 

Wed, 08/01/2012 - 13:13 | Link to Comment Miss Expectations
Miss Expectations's picture

The Jetsons Algo

(Stop this crazy thing)

Wed, 08/01/2012 - 13:52 | Link to Comment Bunga Bunga
Bunga Bunga's picture

In the 60s it took a handful computers to make round trips to the moon. Today a computer has a million times the capacity and power and tens of thousands of them are involved in trading. It looks like in a few years we will need 99.9% of our technological and energy resources only to maintain the financial markets. Where is the kill switch for all this insanity please?

Wed, 08/01/2012 - 14:09 | Link to Comment baseball13
baseball13's picture

Welcome to the world of Modern MONEY LAUNDERING...by the elites...

Wed, 08/01/2012 - 14:32 | Link to Comment Vince Clortho
Vince Clortho's picture

Aren't Free Markets Great!

Wed, 08/01/2012 - 15:18 | Link to Comment jackinrichmond
jackinrichmond's picture

ppffftt    ..seems like a normal day's trading in the paper silver market. 

why the hell is algo-trading permitted in the first place?  

i guess it's too late to change..  without algo-trading, there wouldn't be ANY volume on the exchanges.

Wed, 08/01/2012 - 16:04 | Link to Comment Overflow-admin
Overflow-admin's picture

Please also take SIRI to where it belongs... NOT

 

LOL

Wed, 08/01/2012 - 16:19 | Link to Comment Catflappo
Catflappo's picture

Ummm, if I shorted some stocks just before the Draghi comments, can I now say that it was "my alogorithm" and get my trades cancelled?

Wed, 08/01/2012 - 16:35 | Link to Comment Sweedumz
Sweedumz's picture

That'll teach you Americans to bad mouth Chinese swimmers!

Thu, 08/02/2012 - 03:05 | Link to Comment Rogue Trooper
Rogue Trooper's picture

As the bots become self-aware, they are emotionally immature, just playing childish pranks on y'all.

Thu, 08/02/2012 - 04:29 | Link to Comment Gief Gold Plox
Gief Gold Plox's picture

The 30 minutes is highly suspicious. Where I work, we keep the IT tracing and double checking everything in real-time even when we're doing automatic account topups for measly pennies far, far, far, short of the mutly-million market maker algo. Even at such low values, I've seen people yank the network cables out of servers in order to stop them from making a mess; and you're telling me noone noticed for 30 minutes? Bullshit.

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