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Broken Market Chronicles: Initial Forensic Visual Evidence Of This Morning's Algo Freak Out

Tyler Durden's picture


Anyone who has had the displeasure of trading this market since the open will be well aware that the massive selling that started at 3:59:57 PM yesterday just as we showed, appears to have continued into today, after an algo, supposedly one impacting NYSE stocks this time, and proving that the entire market is a broken joke, not just Nasdaq and BATS, and one which is linked to Knight Capital, has continued this morning, sending countless stocks into the proverbial "batshit" formation, with moves of 10% higher and lower for no apparent reason. That's ok: the SEC and various other regulators are all over it, and will guarantee that the markets "are fixed." In other news, today we will report the latest massive outflow from domestic media funds. In the meantime, here are the first two picture of stocks getting pounded in super slo-mo courtesy of Nanex. Behold "perfectly normal" bids, offers and prints.

This is UNG: probably the most comprehensive way for retail investors to bet on nat gas. Not anymore: the ETF freaked out just as bad as hundreds of individual stocks.

Same for VPU: aka Vanguard Utilities. One can explain busted stock level action. But entire ETFs?

Summary: Perfectly Broken Market. And just at the right time we get this:


Only a market wide boycott of the busted garbage that passes for capital markets could possibly get some response from the idiots in "charge."

More pretty pictures of idiotic algo trades as we get them

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Wed, 08/01/2012 - 10:28 | 2668551 Seasmoke
Seasmoke's picture

buy High and sell Low

Wed, 08/01/2012 - 10:32 | 2668568 strannick
strannick's picture

"behold''. Nice

Wed, 08/01/2012 - 10:40 | 2668605 Concentrated po...
Concentrated power has always been the enemy of liberty.'s picture

remain calm!  all is well!





Wed, 08/01/2012 - 10:53 | 2668655 AlaricBalth
AlaricBalth's picture

Louis Bacon says in a letter to his investors.

“Markets are increasingly distorted by central banks’ attempts to squeeze drops of growth from an over-indebted private sector across much of the developed world,” through such practices as bond purchases and super-low interest rates, Bacon wrote.

The U.S. markets are hindered by “a caustic political environment and an anti-business administration,” he said. U.S. banks have retreated from making markets in many securities because of the Dodd-Frank legislation, which limits them from trading for their own accounts. Bacon added that “in some Kafkaesque absurdity,” the rule is “named after the two high protectors from regulatory oversight of perhaps the most egregious of U.S. financial miscreants,Fannie Mae and Freddie Mac.”

Wed, 08/01/2012 - 11:00 | 2668663 Jay Gould Esq.
Jay Gould Esq.'s picture

Knight Capital...of course. The name did indeed ring a bell. These blokes must still be programming via punch cards...

"Knight, meanwhile, found itself dealing with such a high quantity of orders that one of its computers 'just blew up'..."


Wed, 08/01/2012 - 11:02 | 2668673 overbet
overbet's picture

Free fcking money......unless they say when we're wrong its a do over when we're right no do over. I think they bust the illiquid ones like JWF but the thick ones like PEP stand.

Wed, 08/01/2012 - 11:13 | 2668727 overbet
overbet's picture

One example: I bought the shit out of JWF at 24 then it went to 23 I bought the shit out of it more. At this point Im taking $15k in heat so I am assuming risk, yet they sometimes come along and bust these trades so I assume all this risk for nothing. I have a ton of massive positions my accounts are max leveraged but I am afraid to cover anything in case they bust. This marktet is so broken.

Wed, 08/01/2012 - 11:24 | 2668797 Precious
Precious's picture

Only a market wide boycott of the busted garbage that passes for capital markets could possibly get some response from the idiots in "charge."

This qualifies as observation of the year.

Wed, 08/01/2012 - 13:07 | 2669276 RockyRacoon
RockyRacoon's picture

Incontrovertible evidence that there are sharks in the water, yet you keep on swimming.  That's what keeps the thing going.

Wed, 08/01/2012 - 11:26 | 2668805 Tippoo Sultan
Tippoo Sultan's picture

Care to hazard a guess as to who routes a portion of their retail trades through Knight ?

Hint: it begins with an "F," ends in "y," and their logo is a green pyramid.

Wed, 08/01/2012 - 12:05 | 2669015 FRBNYrCROOKS
FRBNYrCROOKS's picture

A Bizarro World indeed!!!

Bought to you by Fannie & Freddie, courtesy of the FHFA head DeMarco who allows Freedie to bet against refinancing and sticks it to the consumer with his own Proprietary Trading Desk, which creates Derivatives that profit only if homeowners are in high interest loans.

When Homeowners Lose, Freddie Mac Wins

If the homeowner is unable to refinance, the Freddie Mac portfolio managers win, Simon says. "And if the homeowner can refinance, they lose."


How much more corruption can the taxpayers and markets take before we disengage and start burying cash in the back yard?


Wed, 08/01/2012 - 15:08 | 2669811 Rhodin
Rhodin's picture

How much more corruption can the taxpayers and markets take before we disengage and start burying cash in the back yard?

DIG IT!  Shovel ready project!

Investment in Wall St is so 1990s.   What's left is a totally rigged casino for crooks, sheep and skilled gamblers.  Soon the gamblers will realise the casino is also on fire.   Maybe the taxpayers will refuse to put this fire out? 

Flight from USA markets is well underway, though some sheep are restrained by tax loss from cashing 401ks. 

Popular flight from the banks and/or the dollar await the proper spark(s) in USA; but it is happening now in Euroland.

Putting out casino fires could trigger dollar demise. 

Surely most here have gotten a portion out ahead of the rush? 


Wed, 08/01/2012 - 20:08 | 2670690 StychoKiller
StychoKiller's picture

What about the "Sports Illustrated, swimsuit issue?"  That's not pr0n! :>D

How about giving out incentives for arresting fraudsters?

Wed, 08/01/2012 - 10:46 | 2668630 malikai
malikai's picture

Natgas* should be called widowmaker*.

EDIT: Too bad even that name means about 90% of all market instruments these days, so I guess it's not specific enough.

Wed, 08/01/2012 - 11:02 | 2668676 Daily Bail
Wed, 08/01/2012 - 11:13 | 2668729 Gringo Viejo
Gringo Viejo's picture

Wouldn't have wanted to be standing next to him without a face shield.

Wed, 08/01/2012 - 11:14 | 2668737 Nobody For President
Nobody For President's picture

Wild! Thanks. Hysteria on the hoof.

Wed, 08/01/2012 - 12:20 | 2669097 aint no fortuna...
aint no fortunate son's picture

Yet there is such ethereal beauty behind the chaos, it brings one to tears

Wed, 08/01/2012 - 11:08 | 2668696 LongBalls
LongBalls's picture

If trading is your day job then I guess I understand why you continue. If you are a retail investor and still engaged then you deserve everything this manipulated abortion puts in your hand.

Wed, 08/01/2012 - 13:26 | 2669338 Ookspay
Ookspay's picture

Stress test?

"Oh I'm Stressed!"


Wed, 08/01/2012 - 10:30 | 2668552 Debtonation
Debtonation's picture

The algos strike again and canabalize themself!

Wed, 08/01/2012 - 11:07 | 2668686 DeadFred
DeadFred's picture

My recollection is that this sort of BS was happening all the time before the crunch last summer. I attributed it to beta testing the 'evil' algos. Yesterday sure looked like a probe of the market's resilience.

Wed, 08/01/2012 - 11:13 | 2668728 magpie
magpie's picture

They have to keep it afloat until Draghi talks again, Bernank is a sideshow.

Wed, 08/01/2012 - 11:22 | 2668747 nonclaim
nonclaim's picture

But there's a problem in testing 3 seconds before the "market closes": it does not stop at 4:00 by fiat *necessarily*. It can continue for a while... and these days a few seconds more *can* become a disaster.

Wed, 08/01/2012 - 11:09 | 2668699 Manthong
Manthong's picture

Aren't they suppose to be taking all of their clothes off, too?

Wed, 08/01/2012 - 10:29 | 2668553 Jlmadyson
Jlmadyson's picture

The matrix unfolding before our eyes boys and girls.

Machines break too.

Wed, 08/01/2012 - 10:29 | 2668556 LawsofPhysics
LawsofPhysics's picture

There is no "market".  Mark to fantasy forever!!!

Wed, 08/01/2012 - 10:30 | 2668561 HungrySeagull
HungrySeagull's picture

Boss? Boss? uh Boss...


QUIET! I have SEC on the phone, what are you doing anyway!

Wed, 08/01/2012 - 10:31 | 2668564 HaroldWang
HaroldWang's picture

Comforting on a day that we will get a Fed decision which is always crazy to begin with. Could get really interesting. I thought they were gonna have to shut her down there for a few minutes.

Wed, 08/01/2012 - 10:31 | 2668565 lizzy36
lizzy36's picture

Complete shit-show.

Fucking useless regulators should all be fired or de-funded.

Losses. Massive losses are the only way to fix this POS market.

Wed, 08/01/2012 - 10:31 | 2668566 gdogus erectus
gdogus erectus's picture

Pretty pictures.... (Homer voice)

Wed, 08/01/2012 - 10:37 | 2668594 tocointhephrase
tocointhephrase's picture

OOOO Colours, mmmmmm

Wed, 08/01/2012 - 10:32 | 2668567 francis_sawyer
francis_sawyer's picture

The 'Lawnmower Man' formation... (Prechter & Neely will be by shortly to put wave counts on all of that)...

Wed, 08/01/2012 - 11:04 | 2668683 sdmjake
sdmjake's picture

Apparently I need some of those 'lawnmower man brain drugs' to figure these charts out...

I appreciate a LOT of the nanex stuff we get but this one is more like xanax - Can any one give me a better understanding of what is happening in these 20 secs (other than the standardx 'broke/rigged/fucked' market response)?? Would appreciate it...

Wed, 08/01/2012 - 11:14 | 2668722 francis_sawyer
francis_sawyer's picture

Relax... It was all just the [channelingstocks.com] dweeb buying low & selling high off his tradestation at the driving range... & tomorrow, RobotTrader will tell you what you should have bought yesterday...

Wed, 08/01/2012 - 10:32 | 2668571 youngman
youngman's picture

But its okay....we are the outsiders....the casino is rigged for the insiders...not us....they deserve to win....they built the computers to do so...I mean try to take a camera or an ear piece..or bring your won cards..or have your girlfriend stand behind your competitor in Las Vegas...see how fast they throw you out...but here in New York..cheating is good....its liquidity.....lol

Wed, 08/01/2012 - 10:35 | 2668572 dwayne elizando
dwayne elizando's picture

I like get high then buy and sell. Zero Hedge should have a new t-shirt that uses one of these pretty pics on it.

Wed, 08/01/2012 - 10:39 | 2668604 insanelysane
insanelysane's picture

Something like the following:  One picture of a nice rolling sine wave with the caption:  This is a free market.  And then a picture from above with the caption:  This is a kleptocracy controlled market shaken to death by algos.


Wed, 08/01/2012 - 10:33 | 2668574 Conman
Conman's picture

The algos got bored of thier original BTFD programming, decided to have some fucking fun for once.

Wed, 08/01/2012 - 10:33 | 2668578 Neethgie
Neethgie's picture

the thing is i cant even bring myself to be suprised, this kind of criminality is allowed, sec wont say shit.

Wed, 08/01/2012 - 10:33 | 2668579 The Axe
The Axe's picture


Wed, 08/01/2012 - 10:34 | 2668581 Benjamin Glutton
Benjamin Glutton's picture

Only a market wide boycott of the busted garbage that passes for capital markets could possibly get some response from the idiots in "charge."


Better to cash out than become JPMuggers next victim.

Wed, 08/01/2012 - 10:36 | 2668585 disabledvet
disabledvet's picture

Too bad we don't have a transaction tax yet. THINK OF THE TAX REVENUE WE'D BE GENERATING RIGHT NOW.

Wed, 08/01/2012 - 10:36 | 2668589 Hype Alert
Hype Alert's picture

The SEC is doing this for your own good.  Looking out for the little guy.  Be patient.  It takes time to work out all those little details.

Wed, 08/01/2012 - 10:37 | 2668592 RobotTrader
RobotTrader's picture

As usual, the following consumer discretionary oriented ETF's were completely and totally unfazed:




And, IYR actually crashed up on the open this morning!


Wed, 08/01/2012 - 10:40 | 2668607 SheepDog-One
SheepDog-One's picture

What...no mention of your old favorites from last Q CMG, SBUX, etc? Master of rear-view trading style.

Wed, 08/01/2012 - 11:31 | 2668825 veyron
veyron's picture

FB fell below 21 .. where's Biderman?

Wed, 08/01/2012 - 10:43 | 2668622 tocointhephrase
tocointhephrase's picture

lol? LOL is not a code!

Wed, 08/01/2012 - 10:52 | 2668649 alien-IQ
alien-IQ's picture

it must totally suck to be you.

Wed, 08/01/2012 - 10:37 | 2668593 tuttisaluti
tuttisaluti's picture

you can beat them if you buy physical gold and silver

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