Presenting The "Rise Of The HFT Machine" - Visual Confirmation How SkyNet Broke The Stock Market On US Downgrade Day

Tyler Durden's picture

Zero Hedge has not been focusing much on the topic of our broken equity markets recently because if by now, following over three years of coverage, someone is not aware just how fragmented, manipulated and largely broken the market truly is, they never will. Yet every now and then it worth reminding readers who may have stumbled on this blog recently, just how bad things are in graphic format. Our friends at Nanex, who are by far the best forensic analysts of everything that is busted with the US stock market, have completed a masterpiece analysis showing the churning (packet traffic) in the various fragmented US market venues, from the NYSE to the Nasdaq to BATS and so forth, on a daily basis beginning in January 2007 and continuing through today. While the "rise of the HFT machine" over the past 5 years, following the adoption of Reg NMS, will hardly be a surprise to most, what is stunning is the first animated confirmation of the market terminally breaking on August 5, 2011, the day the US was downgraded, an observation that first was made right here on Zero Hedge. Which begs the question: what really happened in the stock market on August 5, 2011 when the US was downgraded to AA+, when everything literally broke, who is intervening constantly in the stock market, and why are they doing so via various HFT intermediary mechanisms?

Note the insanity that begins on August 5, 2011:

Chart: Nanex

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Mongo's picture



The They's picture

the chart dances to salsa music.

Comay Mierda's picture

i got toxic vaccines full of mercury and aluminum when i was a kid and drink flouridated water so i have massive adhd.  can you post the short version for us special people?

smiler03's picture

This is an exceptional chart but it's a shame you can't "slow motion" it? 

nope-1004's picture

The song starts out slow, then the chorus picks up around April 2010.  Gets intense again around April 2011, and Ozzy starts really ramblin around August 2011.  Brain damage and all, he still can rock this house!!

I recommend sitting through the whole thing.  It PROVES how broken and manipulated this Krugmanian sideshow of an economy really is.  Fucking farce, actually.  This pig is going down - hope it blows up all over Benocides' face.

Someone like BrotherJohn should make a YouTube from the gif.


The Big Ching-aso's picture



"Investing in stock market today like having wife who screw you only for money."  


JW n FL's picture

“What concerned us are HFT strategies like latency arbitrage, which is just about getting from point A to point B faster, sniffing out large institutional orders like ours and trying to get ahead of them,” Steiner says

THOR is part of a broader institutional backlash against certain hedge fund strategies.

The system has been in use for a year, and Steiner says it has greatly improved liquidity for RBC and its clients — allowing them to execute orders at the desired price.

Steiner says they had no quarrel with the majority of high frequency trading, which now accounts for 53 percent of the equities markets. That is up from 20 percent in 2005, albeit down from of peak of 60 percent in 2008. RBC itself uses some elements of high frequency trading.


Hober Mallow's picture



So what does packet volume mean?

data volume?

and to what does that translate considering that there are lower volumes in the exchanges?

does this mean that there are a lot of pre-transactions that are cancelled before being executed?

can someone translate without any adjectives what this means?

JW n FL's picture



it means you cant track shit in dark pools..

'Dark Pool' Settlement Shines Light on Potential Abuses

Mr Lennon Hendrix's picture

Just don't....sell....anything....

trebuchet's picture

that gif is FriCKING AWESOME!!!!!!!!!!



WarriorClass's picture

This is a little off topic, but please indulge:

And not just for you guys that can do a couple differential equations:


The link below is an ad on youtube that my son wrote for his new book, The Alchemy of Number Theory. He did the programing and even the music for the advertisement, after working on the book for more than four years.  He did this for one reason.  He wants everyone to know Math; and be empowered by that knowledge.  He even wrote a solution for all prime numbers that you can see on his website for one reason; the glory of the Lord God, and so the average person would no longer be mystified by math, but understand its foundations and logical conclusions. Too many people are afraid of mathematics because our schools have made it far more difficult than it is, and in fact don't want you to understand it or its foundations, or its implications because those lead directly to God as the only logical conclusion of the universe we live in. You may or may not want to buy his book.  I'll tell you this, it is not an easy book.  If you are interested, it will take a lot of personal time and concentration, but if you are willing, it will give you the basis of all math and philosophy that you need to build on in order to come to a logical conclusion in any argument.  And you don't have to be a math whiz to get it, it is all laid out for you but you do have to concentrate and think about it. Anyway, the reason I am sending this email is just that I'd like you to look at the ad that he wrote for the book on youtube. And let us know what you think of the ad, by indicating whether you like it or not, by clicking on the "Like" or "Dislike" under the video. If you like it and want no further insight, that's great; if you want to know more you can link to the Prime Thesis here:
And amaze all your friends by being able to give them every prime number that exists. or go here and look for the book:
And make sure your kids understand math. And The Creator. As the dad of the author of this book, I can only tell you that if you want to be a philosopher (and be a good one), you have to be logical and this book gives you the tools to do just that.  And you will not find this kind of rigor in government run schools today. Thanks and shalom. WarriorClass III


Xkwisetly Paneful's picture

Such a joke, 1/10th the size order of ten years ago,

goes 10times deeper in the market.

Yet the claim they provide liquidity.

TruthInSunshine's picture

Watching this, with it's beating, pulsing, spiking and ebbing rhythym, building into a crescendo of frenetic activity, and then just as seemlessly slipping into a calm, relax, lobotomized state of a bizarre tranquility, coupled with knowing at least something about how brutally warped and broken all markets are now, thanks in large measure to the man they call The Bernank (& his lackeys in tow), it reminds me of the following quote, during one of best scenes (IMO), of the genuinely fantastic movie Gladiator -


Oh you should see the Colosseum, Spaniard! 50,000 Romans watching every movement of your sword, willing you to make that killer blow. The silence before you strike, and the noise afterwards, it rises, rises a storm, as if you were the Thunder God himself!


But that was just a movie, empire lasts forever, and Rome wasn't built, nor did it die, in a day.

I hereby re-nickname The Bernank to BernanCommodus, henceforth to be remembered as he whoeth hath breaketh all markets.


BoNeSxxx's picture

Would it be BernanCommodus, he whoeth hath breaketh all markets


BernanNero, he who hath fiddled with his nethers whilst all markets died?

I think your version gives him too much credit... the man is an imbecile.

Flakmeister's picture

The best line in the movie:

So Spaniard, we shall go to Rome together and have bloody adventures. And the great whore will suckle us until we are fat and happy and can suckle no more....

CAUSE_EFFECT's picture

Oh, I know Iknow!!!  It is the new virtual fireplace app. for smartphones! Now I just need to slap a big enough monitor over the heat sucking hole in my house and I can use it there too!  And, it will sure cut down on all the work of wood fires, just need the sound loop to go with it though.

Hulk's picture

It means go long cisco, juniper and all fiber optic cable manufactures...

JW n FL's picture



Eat the Rich!


The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.


They have been eating You! and Yours!! for GENERATIONS!!!

ebworthen's picture

Hober Mallow

No adjectives?

Anything being sold is bought, then sold, then churned through market sectors in nanosecond buy/sell, put/call cycles.

How do you keep a top or a plate on a stick stay up?  You keep it spinning.

How do you add texture to a meringue or ice cream?  You whip in air.

JW n FL's picture



Eat the Rich!


The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.


They have been eating You! and Yours!! for GENERATIONS!!!

Xkwisetly Paneful's picture

Except that compared to the entire world population you are the rich and compared to historical humanity you enjoy a godlike existence.



Perfect recipe for GM, AMR -hell for the entire USA and most of the free world!

How do keep using 8% act sci assumptions in public pension funds?

How do keep giving away gold plated retirement packages to public employees?

How do you build product when 20% of the cost is paying people who are not even working?

Perfect analogies.


SteinRobyn17's picture

The information seems to show the rise of High Frequency Trading algorithms in play, thus proposing that the current stock trends are being propped up by hedge fund operations to provide liquidity. The spike in volume for August 2011, as things were downgraded implies a broken method without retail investor support. There's no investors, computer program trading between the major firms. Lots of people suspected such antics, but this is the first time information has been shown streaming visually to document the volume of the trading activity.

If I am interpreting the information incorrectly, correct me.

Nice luck out there... Global APO

This stuff scares the hell outta me.

SteinRobyn17's picture

I ne'er play games on a laptop till i am off from home (visiting family or something) and suddenly I even have no games to play. However, I invariably do carry around my portable computer thus this was a wonderful get on behalf of me. i do not play usually on my laptop, however this was an excellent investment for next time i am with a lappy however while not a console. jogos do mario

soccerballtux's picture

to me it just looks like other countries' sercurities became more attractive after our downgrade, and the market started considering and trading on them more.

SteinRobyn17's picture

I think there'll solely be an extra game left during this series! with wade taking part in this dangerous and also the celts particularly the massive price ticket wanting this sensible i cant see the warmth going any farther! jogos da barbie i wrote all regarding it here and the way to bet it therefore coem check it out! jogos da barbie

lemonobrien's picture

ahh, stop paying for shit and see how long your marriage last.

JPM Hater001's picture

Im converting this to youtube... BRB with a link...


JW n FL's picture



and then?

anddddddddddddddddddddddddddddddddddddddddddddddd THEN?



JPM Hater001's picture

Sorry for the delay...I tried to slow it down and make sure the quality was worthwhile so the rendering and upload took forever.

JW n FL's picture



I Love You Man!

Nope! I dont want your bud-light!

Big Slick's picture

JPM Hater - The Youtube video you link to does NOT seem to go past early 2011.  I was waiting for the fireworks and never got them.  If you could do that, it would be a VERY useful exercise.  Thanks!

gunsmoke011's picture

Big Ching - spoken like a true newlywed. Anyone married to a woman more than 5 years really doesn't want to fuck her anymore -- and if they do - they are paying dearly one way or another.

luna_man's picture



You married the wrong one!!


Truth Had To Be Told

true brain's picture

5 years?  You're talking like a single guy. more like 6 months.

JW n FL's picture



Eat the Rich!


The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.


They have been eating You! and Yours!! for GENERATIONS!!!

CH1's picture

Anyone married to a woman more than 5 years really doesn't want to fuck her anymore -- and if they do - they are paying dearly one way or another.

My condolences.

Chump's picture

Lol?  That's very nearly the most idiotic comment about marriage I've ever read.  If I were you I'd quit extrapolating based on my personal experience(s).

The Big Ching-aso's picture



You have to understand Big Ching.   Big Ching always talks in double entendre, sometimes triple entendre.   I once did a quadruple entendre but I got so confused I forgot what I was entredreding about.

idea_hamster's picture

You're living the slo-mo version -- it's the time compression that lets us visualize the change!

After all, there are 10 kinds of people in the world: those who understand binary and those who don't.

hannah's picture

if you have a mac,,,save gif to desktop then open in preview and it shows each 'day' as a single gif.

LeBalance's picture

Life Extension Foundation (LEF) Protocol for the H-e-e-v-y mentals.  Chlorella, Vit C, and other stuff.

Bath in lots of 325 mesh bentonite clay (0.5 pound to start do not exceed 2. pound and handful of epsom salts (drink assload of water.) sit 1/2 hour lay 1/2 hour. To start. Hot water as hot as you can stand, don't hurt yourself but the point is to sweat.)

LEF also has a listing of out-patient "cool" physicians who wiill chelate that crap for you.

As far as the Fluoride goes.


Do your best.  :)

I was abjectly poisoned in 2005 with Mercury after extraction of Amalgam fillings.  Very bad news.  Very!

BandGap's picture

The speed is actually what highsights the message.  See the forest not the trees. The frequencies and "spikes" in the data absolutely jump post August 5th.  The information is in the "jumpiness".

Does this give an indication of wobble? Might want to slow this down and note any swings or arhythmic oscillations in the data (increased amplitudes on a non periodic frequency?). If chaos, or overcorrection occurs does this break down?