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Fractal Algo Strikes Again, This Time Impacts Popular Bond Bear ETF TBT

Tyler Durden's picture





 

After previously testing its mettle in such markets as Natural Gas and Crude Oil, the fractal algo, just like the StuxNet virus, is now ready to progress to its real test: equity products, and specifically ETFs. Courtesy of Nanex' sharp eyes (and extremely complicated market scanners), today we have the first official spotting of the fractal algo moving away from commodities and into extremely popular ETFs, in this case the bearish bond synthetic CDS better known as the TBT. The pattern below is quite unmistakeable. It is quite amazing that just one algorithm can override the entire market and determine the trading pattern of some as hugely popular as an ETF which most hold. We expect that very shortly, we will be observing daily fractal patterns in that most liquid and traded product of all- the SPY, as the market proceeds to become nothing more than a real life version of Nuke-em Duke-em robots.

 


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Wed, 08/10/2011 - 14:10 | Link to Comment Larry Darrell
Larry Darrell's picture

Self aware and moving toward its final destination?

 Gotta love a move of 1.5% in 2 seconds.

Wed, 08/10/2011 - 14:40 | Link to Comment spiral_eyes
spiral_eyes's picture

"arbitrage opportunity"

Wed, 08/10/2011 - 14:08 | Link to Comment slaughterer
slaughterer's picture

When fractally-trading algos get to the SPY, best to just go 300% into gold and move to a Phillipines island.   

Wed, 08/10/2011 - 14:29 | Link to Comment Long-John-Silver
Long-John-Silver's picture

Make sure that Philippine island is free of Muslims.

 

 

Thu, 08/11/2011 - 02:59 | Link to Comment Kobe Beef
Kobe Beef's picture

Or cannibals. Hahaha

Wed, 08/10/2011 - 14:09 | Link to Comment Sudden Debt
Sudden Debt's picture

Tyler,

You optician must make a fortune on you! Aren't you nearly blind from watching charts like this all day?

 

Wed, 08/10/2011 - 14:12 | Link to Comment etrader
etrader's picture

The  ‘the disruptor‘ *is active in the ES again.

There's also rumours abound the out come of the chairmans "normal" meeting  at the whitehouse today

 (Nanex via our friends at ft-alpha)

http://ftalphaville.ft.com/blog/2011/08/08/646276/hft-is-killing-the-emi...

Wed, 08/10/2011 - 14:12 | Link to Comment etrader
etrader's picture

Just sweeping the book

( DP)

Wed, 08/10/2011 - 14:09 | Link to Comment LoneStarHog
LoneStarHog's picture

Tyler, that is Rock'em Sock'em Robots

Wed, 08/10/2011 - 14:10 | Link to Comment mayhem_korner
mayhem_korner's picture

"Nukem & dukem":

http://www.youtube.com/watch?v=OmSSVt7Mfkk

Ahhh...the nuggets of Robocop and other 1980s obscurities.

 

Wed, 08/10/2011 - 14:10 | Link to Comment Falkor
Falkor's picture

Ok. So how to trade them? Also need some info abt this algo and other algos. any site? 

 

Thanks 

Wed, 08/10/2011 - 14:12 | Link to Comment slaughterer
slaughterer's picture

Check out Nanex.  The algo's nickname is "THE DISRUPTOR"

Wed, 08/10/2011 - 14:12 | Link to Comment karzai_luver
karzai_luver's picture

got robot.................

 

How to trade them.!!!!!!!!!!!!!!!!!!!!ahahahahahahaa

Wed, 08/10/2011 - 14:17 | Link to Comment slaughterer
slaughterer's picture

By the time you develop a system to profitably trade them, you will be in prison, unless your legal department has a very large budget.

Wed, 08/10/2011 - 15:18 | Link to Comment mickeyman
mickeyman's picture

A curious game . . .  the only way to win is not to play.

Wed, 08/10/2011 - 14:35 | Link to Comment ZippyDooDah
ZippyDooDah's picture

@Falkor--

 

Buddy, brother, old pal---you gotta be kidding!

Wed, 08/10/2011 - 14:12 | Link to Comment drink or die
drink or die's picture

Cramer was on the Today show again this morning telling people to buy and hold stocks, even though the robots may drive prices down temporarily.  He wouldn't be on TV if he didn't know what he was doing, right?  Right??

Wed, 08/10/2011 - 14:17 | Link to Comment LoneStarHog
LoneStarHog's picture

If you were running a whore house, would you hire virgins?

Wed, 08/10/2011 - 14:33 | Link to Comment Long-John-Silver
Long-John-Silver's picture

Everyone of them is a virgin, just ask them.

Wed, 08/10/2011 - 14:58 | Link to Comment Jason_1sandal
Jason_1sandal's picture

Only for the extremely wealthy....

Wed, 08/10/2011 - 15:18 | Link to Comment Sudden Debt
Sudden Debt's picture

who would want a virgin?

It would be like going to a financial expert for financial advice who never actually looked into the stuff he's pushing.

Who would pay for that?

 

Wed, 08/10/2011 - 14:17 | Link to Comment DormRoom
DormRoom's picture

I heard the Chinese developed it.  It's what pushed the ASX from -4% to +1% on Tuesday. And the S&P up 4% yesterday.

Wed, 08/10/2011 - 14:20 | Link to Comment TruthInSunshine
TruthInSunshine's picture

Pretty soon:

Dave Bowman: Hello, HAL. Do you read me, HAL?
HAL: Affirmative, Dave. I read you.
Dave Bowman: Buy interventionist lot of SPY, HAL.
HAL: I'm sorry, Dave. I'm afraid I can't do that.
Dave Bowman: What's the problem?
HAL: I think you know what the problem is just as well as I do.

 

Wed, 08/10/2011 - 15:00 | Link to Comment Bob
Bob's picture

LOL. The final scene of Fight Club set to also sprach zarathustra.  The 1812 Overture scene in V for Vendetta.  Epic.

Dave will be wishing for a black hole to lose himself in. 

Wed, 08/10/2011 - 14:56 | Link to Comment wandstrasse
wandstrasse's picture

BTW, Dave and his colleague were the first owners of iPads. Just do not know if the year was 1969 or 2001.

Wed, 08/10/2011 - 14:30 | Link to Comment mkkby
mkkby's picture

Fine.  Is there a way humans can exploit their weaknesses?

Wed, 08/10/2011 - 14:42 | Link to Comment NotApplicable
NotApplicable's picture

PMs in hand.

Wed, 08/10/2011 - 15:40 | Link to Comment I did it by Occident
I did it by Occident's picture

Wait, now I'm confused, I thought PMs were good for werewolves and various undead, not for robots. 

Wed, 08/10/2011 - 14:32 | Link to Comment ReactionToClose...
ReactionToClosedMinds's picture

cripes ... I thought The Matrix was just a movie and the Warchowski bros. were nuts ... maybe not

 

 

Morpheus?! ...help

Wed, 08/10/2011 - 14:36 | Link to Comment Long-John-Silver
Long-John-Silver's picture

Use the phone behind a Gold Door.

Wed, 08/10/2011 - 15:21 | Link to Comment Sudden Debt
Sudden Debt's picture

SHIT! THEY ARE RESETTING THE MATRIX! YOU NOTICE WHEN YOU GET THESE FLASHBACKS AND FOR ME IT'S LIKE 2007 ALL OVER AGAIN!

Wed, 08/10/2011 - 14:36 | Link to Comment Madcow
Madcow's picture

Any fool who "invests" in the US Markets deserves what is coming to them -

 

 

Wed, 08/10/2011 - 15:21 | Link to Comment Bam_Man
Bam_Man's picture

US Markets

These are "markets" in name only.

They are hyper-leveraged derivatives casinos, which doesn't sound quite as friendly.

Wed, 08/10/2011 - 15:43 | Link to Comment jowenchrist
jowenchrist's picture

Gimme a 100 on "dont pass" !

Wed, 08/10/2011 - 14:41 | Link to Comment antidisestablis...
antidisestablishmentarianismishness's picture

Looks to be a picture of the perennial bond bears jumping out the window and bouncing off the concrete.  I guess they thought the "trade of the century" was going to be easy money.

Wed, 08/10/2011 - 14:52 | Link to Comment wandstrasse
wandstrasse's picture

Looking at Nanex charts is safe with most medications...

Wed, 08/10/2011 - 15:09 | Link to Comment caerus
caerus's picture

ahhl be bahhk

Wed, 08/10/2011 - 15:13 | Link to Comment mess nonster
mess nonster's picture

If algos take over, and have the potential to crush any sentient being's foolishness to make trades, who controls the algos? I mean, what do they use as feedback, and if it's their own trades, how does (or will) that feedback loop start to magnify itself, and cause huge disruptions and bizarre swings? I ask because underlying any kind of machine's design are basic assumptions. (Ex: basic assumption behind nuclear power- "We are Gods and can control anything with enough engineering!"). In the case of trading algos, is the assumption one of a continuous, infinitely expanding economy, or one that today's system in inherently unsustainable?  If the former, then algos will be inherently bullish, and propel the markets into realms where they are supported by nothing- algos as giant helium tanks for inflating bubbles. If the latter, then they will collapse the markets faster than mere humas would. If algos are neutral, then they have feedback filters to screen out machine trades, and respond only to human decisions... in which case, we're fucked. Final analysis: algos are nothing more than entertainment... just like Cramer.

I don't know shit about algos... just wonderin'...

Thu, 08/11/2011 - 03:13 | Link to Comment Kobe Beef
Kobe Beef's picture

In an algos vs. algos market, a machine sort of natural selection will kick in. The most profitable algos, naturally will engulf & consume their less profitable competitiors over time. Much the same as competition & selection occurs in business today.

Of course, machine iterations of conflict & outcome occur far faster than in Local Human Conscious Time. This is where it gets interesting. It took carbon-based life approximately 3.7 billion years to evolve from photosynthetic prokaryotes to modern eukaryotic life (such as people). How fast could evolution occur in Machine Time?

So, to any computer scientists out there..

Do the Algos evolve? Are they recursive? Can a program write another program?

 

Cheers,

Beef

Sun, 09/16/2012 - 07:25 | Link to Comment auric1234
auric1234's picture

Do the Algos evolve?

Algorithms can be designed to evolve, but within limits. Think of it more like self-calibration mechanism than "becoming a different algorithm". Everything that changes in the algorithm has to be accounted for in the initial design.

Are they recursive?

Sorry, I don't understand your question. Recursion is just a programming technique. You would typically use recursion, for example, if you wanted to calculate the Fibonacci series, or solve the Tower of Hanoi problem. It is often useful, though always avoidable.

Can a program write another program?

Yes, but again within limits. It is fundamentally impossible (at least in this Universe) for an automated process to tell if an arbitrary program will yield the expected results, or even yield any result at all. The groundwork for this was done by Allan Turing in 1936. Read on the "Halting problem" if you want to know more.

 

Sun, 09/16/2012 - 07:31 | Link to Comment auric1234
auric1234's picture

If you want to see evolving "algorithms", you might also be interested in reading about Conway's Game of Life. It's crucial to note, however, that a Life machine is not a "computer" in the general sense (c.f. Turing-completeness). So don't expect them to be useful for stock trading.

 

Wed, 08/10/2011 - 15:27 | Link to Comment TruthInSunshine
TruthInSunshine's picture

Boom goes the dynamite, bitches!!!

(First time I've seen the USD near parity with the CAD in A LONG TIME, too).

Boom Goes the Dynamite

 

Bonus, just for all the Mr. Margins out there:

Mr. Margin Calling 
Wed, 08/10/2011 - 15:21 | Link to Comment treadfreepress
treadfreepress's picture

Can someone please explain this to me?  I understand the concepts of  program trading and algorithms but how do you identify this as an example of it?  What about the chart tells you that?  Thanks!

Wed, 08/10/2011 - 19:32 | Link to Comment dcb
dcb's picture

 

look at the picture, it is a wave sign with the peaks and valleys ever larger. So if you have a buy stop it will hit in, then drop to a lower low, so if you have a stiop loss order it triggers that as well. by eliminating all the people trading, it then controls the market for that security. with a big drop, it usually buys and ramps up. Of course those on power have no trouble with hft and market manipulation. now, if you can find where it is trading, and get the pattern of if, you can make a killing. a few days uco and use were very strange. always hitting a higher higher high, and a lower low. you know you hit the buy stop, then plug inthe days low for  stop loss. then get knocked out of the trade, only to have it go ligher. if you owned the security before, and had a stop loss somewhere it killed that as well. it triggers the buys, notices the buy orders, then sells into others buying the security

 

Amd yes ypou are correct that for the great mazjority of people tyler does a poor job of saying what the picture means. it's not that uncommon on a most excellent site, but since i consider one of the missions of ZH to be spreading the word of how screwed up our market are, they fail sometimes. not all have the same knowledge base.

Wed, 08/10/2011 - 19:32 | Link to Comment dcb
dcb's picture

 

look at the picture, it is a wave sign with the peaks and valleys ever larger. So if you have a buy stop it will hit in, then drop to a lower low, so if you have a stiop loss order it triggers that as well. by eliminating all the people trading, it then controls the market for that security. with a big drop, it usually buys and ramps up. Of course those on power have no trouble with hft and market manipulation. now, if you can find where it is trading, and get the pattern of if, you can make a killing. a few days uco and use were very strange. always hitting a higher higher high, and a lower low. you know you hit the buy stop, then plug inthe days low for  stop loss. then get knocked out of the trade, only to have it go ligher. if you owned the security before, and had a stop loss somewhere it killed that as well. it triggers the buys, notices the buy orders, then sells into others buying the security

 

Amd yes ypou are correct that for the great mazjority of people tyler does a poor job of saying what the picture means. it's not that uncommon on a most excellent site, but since i consider one of the missions of ZH to be spreading the word of how screwed up our market are, they fail sometimes. not all have the same knowledge base.

Wed, 08/10/2011 - 15:29 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Unfortunately no one can be told what the Matrix is.  You have to see it for yourself.

Wed, 08/10/2011 - 15:36 | Link to Comment I did it by Occident
I did it by Occident's picture

SkyNet, is it you?

 

Wed, 08/10/2011 - 15:40 | Link to Comment jowenchrist
jowenchrist's picture

My name is Dick - but I'm not a crook, trut me.

Wed, 08/10/2011 - 15:50 | Link to Comment vast-dom
vast-dom's picture

TBT super buy at mid $24's! 

 

In fact, it will be the buy of a lifetime! The bond market will break and when it does this mother goes parabolic to the Nth!

Wed, 08/10/2011 - 16:04 | Link to Comment sureseam
sureseam's picture

It may go parabolic but the issuer may have already gone bust.  Or alternatively the financial instruments (credit default swaps etc) underpinning TBT may well not be functioning.

Folk moan about the phyical gold ETFs; frankly they are the least worst of these things.

 

 

Wed, 08/10/2011 - 16:16 | Link to Comment vast-dom
vast-dom's picture

Total and utter BULLSHIT sureseam.

 

Put another way: PROVE IT! 

 

TBT will go through the ROOF!

But hey if you want to talk shit and sit on the sidelines then by all means....


Fri, 12/02/2011 - 13:39 | Link to Comment beachdude
beachdude's picture

Looking through the archives for TBT and stumbled across this. <19 today, an even better super buy... right? Source for total/utter BS is in your mirror.

Wed, 08/10/2011 - 18:01 | Link to Comment exiledbear
exiledbear's picture

They're breaking the game. This is the trading equivalent of griefing. LOL. They're shooting themselves in the foot. Then again, maybe that's what they want - everyone to stop playing.

Wed, 08/10/2011 - 18:24 | Link to Comment Scalaris
Scalaris's picture

Looks like Jackson Pollock's No 5 remastered by Robots.

Wed, 08/10/2011 - 19:30 | Link to Comment dcb
dcb's picture

look at the picture, it is a wave sign with the peaks and valleys ever larger. So if you have a buy stop it will hit in, then drop to a lower low, so if you have a stiop loss order it triggers that as well. by eliminating all the people trading, it then controls the market for that security. with a big drop, it usually buys and ramps up. Of course those on power have no trouble with hft and market manipulation. now, if you can find where it is trading, and get the pattern of if, you can make a killing. a few days uco and use were very strange. always hitting a higher higher high, and a lower low. you know you hit the buy stop, then plug inthe days low for  stop loss. then get knocked out of the trade, only to have it go ligher. if you owned the security before, and had a stop loss somewhere it killed that as well. it triggers the buys, notices the buy orders, then sells into others buying the security

Wed, 08/10/2011 - 21:10 | Link to Comment StychoKiller
StychoKiller's picture

You seem to know a lot about this for an "innocent person!"

Wed, 08/10/2011 - 22:39 | Link to Comment sellstop
sellstop's picture

So I guess you don't want to use stops!

Stops have always been subject to getting picked off. Don't remind me of the FOJ market back in the day..... shudder.

gh

Wed, 09/14/2011 - 05:27 | Link to Comment chinawholesaler
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