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Huge Spike In HFT Packet Stuffing As Market Tumbles To Fresh Lows

Submitted by Tyler Durden on 07/27/2011 15:49 -0400

Yes, SkyNet, we are watching you. And an odd correlation: every time a resistance level is breached, the computers go apeshit. Truly odd how this happens everytime computers try to outrun each other.

Source: Nanex

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Wed, 07/27/2011 - 15:51 | 1499021 John McCloy

This is orchestrated. The Primary dealers are firmly in control of where this market goes at all times. They are tired of not having a resolution.

Wed, 07/27/2011 - 15:59 | 1499053 Spirit Of Truth

Disagree. Tis a matter of "efficient insanity".

http://thespiritoftruth.blogspot.com/2010/10/wall-street-is-googled.html

The algos are devised to respond to the 'fear factor' by preemptively dumping when there are signs thereof. Thus, the algos become a highly efficient mechanism of mass panic. We saw what this does in the May 2010 "flash crash" and 'central authorities' opted to ignore the pattern for the most part.

Wed, 07/27/2011 - 16:03 | 1499070 SheepDog-One

Mass panic is DOW down 200? Wow then we really are screwed.

Wed, 07/27/2011 - 16:10 | 1499100 jus_lite_reading

Exactly. WOE IS ME BECAUSE THE DOW IS DOWN 200 POINTS WAHH WAHH!!!

Wake me up when they lose control and there is mass exodus from stocks and a major bank run.. then the DOW is down 2000 points in a few minutes...

Wed, 07/27/2011 - 16:17 | 1499128 SheepDog-One

Roger that.

Wed, 07/27/2011 - 16:23 | 1499146 Spirit Of Truth

Agreed. The DJIA and SPX found support at the 50-day. The point of "panic" is when technical levels are decisively breached and the algos feed on each other like computerized piranhas attacking a stray kitten tossed in a virtual river. You can get an instantaneous mindless feeding frenzy where everyone is eaten alive.

Wed, 07/27/2011 - 16:00 | 1499058 SheepDog-One

Is -200 DOW supposed to worry the politician puppets? Because it certainly isnt worrying me.

Wed, 07/27/2011 - 16:03 | 1499069 cosmictrainwreck

Agreed, John. Very clearly a controlled descent past few days. BUT sure was fun to watch the Dow limp into EOD like a whipped dog....HA. Nonetheless - by sheer coincidence.... NOT -200 and 12,300 HELD. What an amazing coincidence

Wed, 07/27/2011 - 16:09 | 1499088 Cleanclog

More interesting Primary Dealer moves - a narrowing yield curve, and there was briefly a slightly inverted curve in the very short end between 1 and 3 month T-bill. Now back to upward slope, but keep an eye on this. A real inversion will be a very important signal of inflation expectations +/or distrust in Treas repayment short term.

Wed, 07/27/2011 - 16:14 | 1499116 No Bid

i'm still wondering how the computers are controlling the volume. why nothing until today? this has been very well telecast.

Wed, 07/27/2011 - 15:52 | 1499023 monopoly

Like minds think alike Tyler. No big deal. Man, when this blows up they will hear it on Mars.

Wed, 07/27/2011 - 21:43 | 1500128 max2205

FYI. SEC Will Track Biggest Traders' Activity. The U.S. Securities and Exchange Commission will impose a system to monitor the behavior of high- frequency trading firms and hedge funds under new reporting standards for the most active market participants. SEC commissioners voted 5-0 today to adopt a tracking system for firms that buy and sell at least 2 million shares a day or meet other volume standards. The system, initially proposed three weeks before the May 2010 crash that temporarily erased $862 billion in U.S. share value, aims to help guard against market abuse and manipulation. “The collection of this information is particularly important given the increasingly prominent role played by very active market participants including high-frequency traders,” SEC Chairman Mary Schapiro said before the vote.

Wed, 07/27/2011 - 15:55 | 1499027 pesamystik

HFT's Gone Wild: Spring Break Edition

Wed, 07/27/2011 - 15:59 | 1499051 Cash_is_Trash

They've taken my MolyCorp and gang-banged her like it's Spring Break in Oakland, CA.

Wed, 07/27/2011 - 16:11 | 1499102 mynhair

There is a 'sell' button. You should get acquainted with it. Dumped AVL yesterday, for example.

Wed, 07/27/2011 - 15:55 | 1499030 Black Forest

"Banks Bracing for U.S. Downgrade See No Panic Yet" [Bloomberg headline]

Wed, 07/27/2011 - 16:05 | 1499079 Sabibaby

That's what they tell the rest of us.

Wed, 07/27/2011 - 16:10 | 1499098 Sabibaby

Actually I do wonder what they would tell the rest of us if they were panicked?

Ohh yea.... nothing, just like the last time!

Wed, 07/27/2011 - 15:56 | 1499031 Popo

One wonders what it will look like when computers try to outsell computers.

Epic, I would think...

Wed, 07/27/2011 - 16:07 | 1499085 Sabibaby

I've never seen a computer stab another computer in the back but I have a feeling we'll be seeing "All Your Algo's Are Belong To Us" any moment now.

Wed, 07/27/2011 - 15:56 | 1499034 drink or die

Final spike right at the end, it's gonna close above 1300. Thank god, the world is saved for yet another day.

Wed, 07/27/2011 - 15:56 | 1499036 digitlman

God forbid the SEC look into this.

Wed, 07/27/2011 - 16:12 | 1499109 Re-Discovery

Why would the Southeastern Conference look into this? Are the Algos paying football players?

(Is there another SEC of which I am not aware?)

Wed, 07/27/2011 - 21:15 | 1500083 jerry_theking_lawler

no, there is no other that matters.

Wed, 07/27/2011 - 15:57 | 1499037 redpill

Fibonacci thresholds are a self-fulfilling prophecy for the HFT army.

Wed, 07/27/2011 - 15:57 | 1499041 unununium

The closing ramp is failing miserably. Tomorrow ugly.

Wed, 07/27/2011 - 15:57 | 1499042 spiral galaxy

Tyler, can't thank you enough for all your work/insight! :-)

Wed, 07/27/2011 - 16:05 | 1499081 trentusa

Tyler- I hear business tvs talkin' heads echoing this website's headlines 5 mins after a story goes up. Keep up yer superb journalism. Lets make the big banks walk the plank!! A downgrade won't be too bad for America compared to the necessarily vigorous democratic debate that will follow & into the popular American consciousness.

Wed, 07/27/2011 - 16:10 | 1499099 andybev01

Ha!

I'd like to see TD make some crazy-yet-plausible shit up and see if it makes it to the teleprompters!

Wed, 07/27/2011 - 15:58 | 1499043 SwingForce

ALERT! THE BANKSTERZ MANIFESTO STATES: One way or another, we will take ALL YOUR MONEY.

A big drop only makes sense if they are RUNNING THE SELL-STOPS (AGAIN)-

Prepare for Blastoff to Planet O!

Wed, 07/27/2011 - 15:58 | 1499045 SheepDog-One

Skynet and the war of the machines.

Wed, 07/27/2011 - 15:59 | 1499049 juggalo1

OMIGOD OMIGOD OMIGOD! The market is freaking out! It hasn't been this low since... The beginning of the month? Unless the shoe drops fast it looks like all the economists are still overblowing the impending default. I mean remember in '08 when the markets would take 5% swings in a few hours? 1%, 2% these numbers are nothing.

Wed, 07/27/2011 - 16:05 | 1499061 SheepDog-One

Oh noes! The DOW almost fell -200 it has to be armageddon! QUICK politicians cant you print some trillions and save us from this disaster? We be scared out here in our huddled unwashed masses!

Wed, 07/27/2011 - 15:59 | 1499052 buzzsaw99

I wish there were more ponies and fewer dogs in this dog and pony show. Boehner wears guyliner, and Pelosi... :shudders:

Wed, 07/27/2011 - 23:10 | 1500238 DeadFred

Be nice. It's hard for Reptilians to keep their host bodies looking good.

Wed, 07/27/2011 - 16:00 | 1499057 caerus

woohoo! Greatest show on earth! Time for a cocktail or twelve!

Wed, 07/27/2011 - 16:01 | 1499060 Long-John-Silver

Skynet would have wiped it's self out when the nukes hit. Electromagnet Pulse Bitchez!

http://en.wikipedia.org/wiki/Electromagnetic_pulse

Wed, 07/27/2011 - 16:02 | 1499062 monopoly

So if this bull run is over, now what? The stock market is the last bastion of wealth that many of the people have. Nothing left in their home, except cave status, few raises, fewer jobs, worthless money and tons of debt to insolvent, useless banks. At some point this gets real ugly. Better stock up folks. I thought this would last another couple of years before the puzzle was complete. But the pieces are filling in much faster than I thought.

Wed, 07/27/2011 - 16:46 | 1499233 andybev01

It's beginning to look a lot like Christmas...

Wed, 07/27/2011 - 23:12 | 1500241 DeadFred

This is why the good Lord gave us serfdom.

Wed, 07/27/2011 - 16:03 | 1499066 gatorontheloose

a lack of cooling would shut down those servers right quick

Wed, 07/27/2011 - 16:03 | 1499067 jmcadg

HFT - Autoimmune disease bitchez

Wed, 07/27/2011 - 16:03 | 1499068 hackettlad

Tyler, though I am reminded of Winston's line from 1994, that "sanity is not statistical", still your sterling work makes us feel less alone.

Wed, 07/27/2011 - 16:53 | 1499263 andybev01

Was that from the updated version?

Wed, 07/27/2011 - 16:17 | 1499072 Biggvs

Did something funny happen to GMCR at the close? My data stream stopped in its tracks for this security only. Earnings call in about an hour.

Wed, 07/27/2011 - 16:05 | 1499073 OuaisBla

Fresh Lows...

The only place to hear to beautiful expression is here. I truly hate when I read on various sources "Fresh high".

That is heresy. There is no fresh high (even for gold or silver) is a bubble market based on currency devaluation.

FRESH LOWS INDEED! At last...

Wed, 07/27/2011 - 16:47 | 1499237 Liquid Courage

Gotta love/hate that semantic bias! Of course they will never say "fresh lows" but talk about the strength of the support at 1300.

Other favourites: "solid gains" and that old stand-by "up nicely" ... right, like a drunk on a window ledge.

So blatant and obvious ... I'm afraid if their balls get any bigger, they'll block out the sun and plunge the planet into some kind of nuclear winter ... or is that gargantuo-testicular-winter? Propadandistic Penumbra? Total Eclipse of the Truth?

This is an old theme, of course, but is pure Keynesianism-in-extrema. If all that's required is to boost those pesky and mysterious "Animal Spirits", then aren't we telling "Good Lies"? So the ultimate end of trying to run the world on false principles is a world that "can't handle the Truth". What a monstrous joke this has become.

Wed, 07/27/2011 - 16:05 | 1499076 chump666

knocking out hft supports. puts on since euro session, major capiulation trigger creeping up

Wed, 07/27/2011 - 16:05 | 1499077 oa92000

SPY filled the gap..

Wed, 07/27/2011 - 16:06 | 1499082 jmcadg

Precipitous drops say CBNC - Please, it's only 1 or 2%.

Wait for the 10%+ kick. That's when the fun starts.

Wed, 07/27/2011 - 16:07 | 1499089 caerus

Agreed...can't wait

Wed, 07/27/2011 - 16:07 | 1499086 equity_momo

"POPCORN , COLAS , POPCORN , COLAS , GET YOUR POPCORN AND COLAS HERE"

Wed, 07/27/2011 - 16:09 | 1499097 caerus

Cola please! I enjoy a splash in my jack daniels

Wed, 07/27/2011 - 16:15 | 1499122 mynhair

Beer here, please!

uurrppp

Wed, 07/27/2011 - 16:07 | 1499087 chump666

bounced...

Wed, 07/27/2011 - 16:09 | 1499094 trentusa

fresh lows... there is no such thing as rock bottom...see 'King Lear,' after King Lear was ousted and roving his own lands as an exiled peasant. Addresses the very subject of rock-bottom.

Wed, 07/27/2011 - 16:09 | 1499095 espirit

Algo bag holders get nothing, hahahahaha!

Wed, 07/27/2011 - 16:12 | 1499101 web bot

The whole system is broke. Wall street via algos and robots control the markets, elietes make $$$$$$$$$$$$$$, little people get hammered. I suppose it's better than 200 years ago, at least today the masses eat (for now), we have soap (greatest invention to extend human life) and we don't have the military kicking down the door.

The sytem is broken and no one is going to fix it... the great reset is coming. Hold on to your PMs.

Wed, 07/27/2011 - 16:12 | 1499107 vast-dom

the real question: why is skynet manipulating silver down?

Wed, 07/27/2011 - 16:28 | 1499170 OuaisBla

DXY broke a falling wedge to the upside. This is bullish for USD and VERY VERY bad for Stock market!

Wed, 07/27/2011 - 17:03 | 1499302 vast-dom

So looking back at 2008 and thereafter the trend for DXY is extreme upside, skynet fuckery notwithstanding.

Wed, 07/27/2011 - 16:12 | 1499108 slewie the pi-rat

the london afternoon gold fix was a new high of 1625, off abt $10 from that, now.

miners headed south with other stocks, even getting a little %-punished.

silver, having (re-) approached $41.50 turned sharply and now = 40.22.

steady.

Wed, 07/27/2011 - 16:22 | 1499148 OuaisBla

The uptrend got severly damaged today in both gold and silver.

The candle today is mostly a bearish englufing one on both silver and gold. A reversal indication IMO.

Wed, 07/27/2011 - 16:12 | 1499111 oa92000

somebody dropped a bomb in Washington..

Wed, 07/27/2011 - 16:13 | 1499113 slaughterer

Thanks Tyler, you are the big Other.

Wed, 07/27/2011 - 16:16 | 1499114 Bob

Dylan Ratigan is going fucking nuclear. What a glorious sight to see. Nobody else gets a chance to say much, but the mother fucker is on a tear.

Wed, 07/27/2011 - 16:14 | 1499115 RobotTrader

ES -1298. Can they save it or not?

It all depends on that Euro and the CRB Index

Wed, 07/27/2011 - 16:14 | 1499118 SheepDog-One

Go dunk your head in a bucket.

Wed, 07/27/2011 - 16:15 | 1499121 web bot

All we need is the perfect storm and watch PMs in this environment.

Wed, 07/27/2011 - 16:18 | 1499132 JPM Hater001

I took up a variety of short positions against the banks back in May expecting some "event" to trash the market and I clean up...new profits and new silver.

That plan was great until the Fed Q2 ending http://www.zerohedge.com/article/biggest-fed-money-pump-lehman-went-under

Pumped 76 BILLION into the market.

This house of cards is coming down whether they like it or not.

Wed, 07/27/2011 - 16:20 | 1499140 chump666

watching asia open esp shanghai, false breakout yesterday. dont know what roubini smokes but he better get off, China? UST's under pressure witj rhe 10yr rising...borrowing costs for the whole friggin world are starting to blow out

Wed, 07/27/2011 - 16:23 | 1499155 phraseshifter

stalactites or stalagmites...same cave

Wed, 07/27/2011 - 16:23 | 1499159 jmcadg

I'm short S&P. Come on make me proud you cheeky HFT bots :)

Wed, 07/27/2011 - 16:47 | 1499235 erik

interesting that many on ZH see these drops through a cynical lens now. one or two years ago people would be amped up about the market being ready to drop after a day like this, and it never did. now that we are all jaded by bailout/intervention no one believes it will drop. not bulls, nor bears. everyone is non-chalant, knowing that QE3 is around the corner. bulls have no fear, and bears know that intervention awaits.

this may mean we are finally in a very dangerous predicament...

Wed, 07/27/2011 - 16:48 | 1499236 erik

Wed, 07/27/2011 - 17:48 | 1499515 rsnoble

Interesting that when we finally got to DOW 10k it was the best thing that ever happened to the US. If we were to crash back down to that level there'd be idiots talking about marshall law.

Wed, 07/27/2011 - 18:30 | 1499671 mind_imminst

Just wondering about something related to algo trading. It is interesting to see the yields on US bonds remain low. 10 year below 3%, on the eve of a US default. Either everyone knows that the debt ceiling will be raised, after all, that is how we got so far in debt, the government always raises the debt ceiling, OR the hft algos are not programmed correctly to factor in a default on US bonds (even a technical default). Either the FED is still secretly buying treasuries or the algos are (on the secondary market). For decades and decades the flight to safety has been US treasuries. I wonder if the algos were never programmed to consider a default on U.S. bonds and thus are blindly picking up some of the bond buying slack right now. Maybe I am way off the mark here, don't know.

Wed, 07/27/2011 - 21:47 | 1500133 cocoablini

This is not a HFT rebellion by the banks. The banks are orchestrating the market "fall" to scare republicans into raising debt ceilings with minimal austerity that affects the banks.
A real pull the plug event would have the market drop 2000 points- since there isn't a soul living who is buying

Wed, 07/27/2011 - 22:30 | 1500174 Arthur Two Shed...

Computers go apeshit.

Phrase of the week!

Thanks for that!

Wed, 07/27/2011 - 23:11 | 1500240 mickeyman

Usually they are only programmed for things that have already happened and for which there is an observed and measured response. Just like in the past stat arb algos did not consider that there were other stat arb algos that might all move together until the unfortunate events of 2007, the algos either do not consider US debt default a possibility, or there is some wild guess in the algo as to an appropriate response. Either way, there should be a great deal of excitement.

Wed, 07/27/2011 - 23:33 | 1500282 macambaman

HFTs lurking variables yet unsuspected by many.

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Huge Spike In HFT Packet Stuffing As Market Tumbles To Fresh Lows

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