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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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Mon, 02/06/2012 - 16:31 | 2131653 Mongo
Mongo's picture

BINARY SOLO!

0000001
00000011
0000001
00000011
0000001
0000001
0000001
0000001

 

http://www.youtube.com/watch?v=WGoi1MSGu64

Mon, 02/06/2012 - 16:33 | 2131672 The They
The They's picture

the chart dances to salsa music.

Mon, 02/06/2012 - 16:55 | 2131741 Comay Mierda
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?

Mon, 02/06/2012 - 16:58 | 2131800 smiler03
smiler03's picture

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

Mon, 02/06/2012 - 17:10 | 2131841 nope-1004
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.

 

Mon, 02/06/2012 - 17:25 | 2131861 The Big Ching-aso
The Big Ching-aso's picture

 

 

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

Neoconfucius

Mon, 02/06/2012 - 17:29 | 2131928 JW n FL
JW n FL's picture

 

 

http://www.institutionalinvestor.com/Article/2971794/Investors/RBC-Takes-On-High-Frequency-Predators.html?ArticleId=2971794&LS=EMS610309

“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.

 

Mon, 02/06/2012 - 17:48 | 2132004 Hober Mallow
Hober Mallow's picture

Conclusions?

 

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?

Mon, 02/06/2012 - 17:59 | 2132050 JW n FL
JW n FL's picture

 

 

it means you cant track shit in dark pools..

http://online.wsj.com/article/SB10001424052970204777904576651111404462184.html

'Dark Pool' Settlement Shines Light on Potential Abuses

Mon, 02/06/2012 - 19:47 | 2132348 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

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

Mon, 02/06/2012 - 20:13 | 2132408 trebuchet
trebuchet's picture

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

 

 

Mon, 02/06/2012 - 23:35 | 2132837 WarriorClass
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. http://www.youtube.com/watch?v=N5syRnaXwpg&feature=youtu.be 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. http://www.youtube.com/watch?v=N5syRnaXwpg&feature=youtu.be 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: https://sites.google.com/site/primenumbertheory/
And amaze all your friends by being able to give them every prime number that exists. or go here and look for the book: http://www.amazon.com/Alchemy-Number-Theory-1/dp/1470002159/ref=sr_1_2?ie=UTF8&qid=1328287867&sr=8-2
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

 

Tue, 02/07/2012 - 00:11 | 2132904 Triggernometry
Triggernometry's picture

Bra-fucking-vo!!!

Tue, 02/07/2012 - 00:38 | 2132957 Careless Whisper
Careless Whisper's picture

EPIC

 

i think i have the perfect background music for the gif;

http://www.youtube.com/watch?v=rT86MuOVZy8

 

Tue, 02/07/2012 - 01:15 | 2132999 Oh regional Indian
Oh regional Indian's picture

Actually as it turns out, I do. :-)

/songs-for-SONGS/

 

ori

Tue, 02/07/2012 - 01:16 | 2133001 WarriorClass
Tue, 02/07/2012 - 00:31 | 2132944 longdong silver
longdong silver's picture

Tyler will give you a guest post for this.....

Mon, 02/06/2012 - 23:36 | 2132839 Xkwisetly Paneful
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.

Tue, 06/26/2012 - 19:09 | 2563221 SteinRobyn17
SteinRobyn17's picture

You were right :) toe jacks

Mon, 02/06/2012 - 18:09 | 2132077 TruthInSunshine
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 -

Proximo:

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 like...like 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.

 

Mon, 02/06/2012 - 18:16 | 2132105 BoNeSxxx
BoNeSxxx's picture

Would it be BernanCommodus, he whoeth hath breaketh all markets

OR

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.

Mon, 02/06/2012 - 22:23 | 2132671 Flakmeister
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....

Mon, 02/06/2012 - 18:24 | 2132122 CAUSE_EFFECT
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.

Mon, 02/06/2012 - 22:23 | 2132674 Hulk
Hulk's picture

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

Mon, 02/06/2012 - 22:53 | 2132740 JW n FL
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.

http://www.federalreserve.gov/faqs/about_14986.htm

 

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

Mon, 02/06/2012 - 22:35 | 2132704 ebworthen
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.

Mon, 02/06/2012 - 22:53 | 2132742 JW n FL
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.

http://www.federalreserve.gov/faqs/about_14986.htm

 

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

Mon, 02/06/2012 - 23:54 | 2132864 Xkwisetly Paneful
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.

 

EB,

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.

 

Sat, 07/28/2012 - 19:38 | 2659572 SteinRobyn17
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.

Sat, 08/04/2012 - 18:57 | 2678643 SteinRobyn17
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

Mon, 02/06/2012 - 23:40 | 2132848 soccerballtux
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.

Sat, 08/04/2012 - 18:53 | 2678637 SteinRobyn17
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

Mon, 02/06/2012 - 17:42 | 2131983 lemonobrien
lemonobrien's picture

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

Mon, 02/06/2012 - 17:43 | 2131985 JPM Hater001
JPM Hater001's picture

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

 

Mon, 02/06/2012 - 18:11 | 2132089 JW n FL
JW n FL's picture

 

 

and then?

anddddddddddddddddddddddddddddddddddddddddddddddd THEN?

and THENNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNN?

 

Mon, 02/06/2012 - 20:23 | 2132419 JPM Hater001
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.

http://youtu.be/EfHPjV1SpHk

Mon, 02/06/2012 - 22:33 | 2132700 JW n FL
JW n FL's picture

 

 

I Love You Man!

Nope! I dont want your bud-light!

Thu, 08/09/2012 - 08:22 | 2690432 Big Slick
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!

Mon, 02/06/2012 - 17:47 | 2132002 gunsmoke011
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.

Mon, 02/06/2012 - 18:04 | 2132066 luna_man
luna_man's picture

 

"gunsmoke011"

You married the wrong one!!

 

Truth Had To Be Told

Mon, 02/06/2012 - 18:07 | 2132076 true brain
true brain's picture

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

Mon, 02/06/2012 - 22:54 | 2132741 JW n FL
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.

http://www.federalreserve.gov/faqs/about_14986.htm

 

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

Mon, 02/06/2012 - 18:09 | 2132084 Al Gorerhythm
Al Gorerhythm's picture

Wuv. twooe wuv.

Mon, 02/06/2012 - 20:07 | 2132394 CH1
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.

Mon, 02/06/2012 - 20:42 | 2132470 Chump
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).

Mon, 02/06/2012 - 22:14 | 2132644 The Big Ching-aso
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.

Mon, 02/06/2012 - 17:11 | 2131850 idea_hamster
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.

Mon, 02/06/2012 - 19:52 | 2132361 hannah
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.

Mon, 02/06/2012 - 19:31 | 2132298 LeBalance
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.

Move!

Do your best.  :)

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

Mon, 02/06/2012 - 22:35 | 2132705 BandGap
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?

 

 

Mon, 02/06/2012 - 17:49 | 2132011 Stack Trace
Stack Trace's picture

Daft Punk 'Disk Wars' is perfect for this!

Mon, 02/06/2012 - 18:44 | 2132185 Awakened Sheeple
Awakened Sheeple's picture

No, it dances to "The Ecstasy of Gold"

http://www.youtube.com/watch?v=ZNGe7iK1O-4

Mon, 02/06/2012 - 20:32 | 2132443 Awakened Sheeple
Awakened Sheeple's picture

What's the Black Swan that brings THAT monstrosity down? It's a brave new world...

Mon, 02/06/2012 - 19:05 | 2132214 ShankyS
ShankyS's picture

Looks like a Leeerrroooyyyy Jenkins! moment to me. 

 

What do you think Timmah, can you give me a number crunch real quick? 

 

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

Mon, 02/06/2012 - 21:44 | 2132589 Atomizer
Atomizer's picture

304331329330342258323342258308337346324343340347258271258313330323342258331341258302337344327239236239236

 

What is Love

 

01001001 00100000 01110100 01101000

01101111 01110101 01100111 01101000

01110100 00100000 01101001 01110100

00100000 01110111 01100001 01110011

00100000 01100001 01110000 01110000

01110010 01101111 01110000 01110010

01100001 01110100 01100101 00100000

01110011 01101111 01101110 01100111

00100000 01101001 01101100 01101100

01110101 01110011 01110100 01110010

01100001 01110100 01101001 01101110

01100111 00100000 01001000 01000110

01010100 00100000 01101101 01110101

01101110 01100011 01101000 01101001

01101110 01100111 00100000 01100100

01101111 01110111 01101110 00100000

01101101 01100001 01110010 01101011

01100101 01110100 01110011 00101110

00100000 01000010 01010100 01010111

00101100 00100000 01101000 01100001

01100011 01101011 00100000 01110100

01101000 01100101 00100000 01101111

01110100 01101000 01100101 01110010

00100000 01100011 01101111 01100100

01100101 00101110 00100000 01010100

01100101 01101100 01101100 00100000

01101101 01101111 01101101 01100001

00100000 01110111 01101000 01100001

01110100 00100000 01111001 01101111

01110101 00100000 01100110 01101111

01110101 01101110 01100100 00100000

01101111 01110101 01110100 00101110

00100000 01010100 01101000 01100001

01101110 01101011 01110011 00101110

Mon, 02/06/2012 - 16:53 | 2131758 Eireann go Brach
Eireann go Brach's picture

Like a 13 year old with a playstation, it would not surprise me if Obama has access to the ON/OFF button on the stock market that Bernanke has that controls the up and down daily movements of the Russell 2000!

Mon, 02/06/2012 - 19:53 | 2132363 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

It's an 8 bit Nintendo from '87 and Timmah controls the market by playing the game PPT:  Masters of the Universe and the High Frequency Algos from Hell.

Mon, 02/06/2012 - 23:03 | 2132773 btechtrader
btechtrader's picture

Someone does, but whoever it is is much more important than the president.

Tue, 02/07/2012 - 00:25 | 2132932 Cathartes Aura
Cathartes Aura's picture

remember all the jokes about Dubya  being on vacation so often? and now Obama gets folks counting up his days "off" - connect the dots people, figureheads paid to take the heat, while the real work is done "backstage". . .

by the way, it appears the Repub team prezzies spend the most time "away" in their first year as titleholder. . .but who's counting. . .

http://www.factcheck.org/2010/01/president-obamas-vacation-days/

Mon, 02/06/2012 - 18:51 | 2132202 Alea Iactaest
Alea Iactaest's picture

Skynet, bitchez. All you need is this video and that one from last week with the swarm of drones flying in formation to see the future.

Mon, 02/06/2012 - 21:10 | 2132521 Jumbotron
Jumbotron's picture

Mongo said....

BINARY SOLO!

0000001
00000011
0000001
00000011
0000001
0000001
0000001
0000001

 

To follow that meme....

1001001 SOS....

1001001 In Distress.....

Bows his head to the Mother Of All Machines !!!

http://www.youtube.com/watch?v=f_-erwkhpXQ&feature=related

 

Which leads us to being ground "Between The Wheels"

'We can go from boom to bust

From dreams to a bowl of dust

We can fall from rockets' red glare

Down to "Brother can you spare..."

Another war..

Another wasteland

And another lost generation'

http://www.youtube.com/watch?v=ZGasaah8lrw&feature=related 


 

Mon, 02/06/2012 - 22:09 | 2132641 Jumbotron
Mon, 02/06/2012 - 22:35 | 2132706 spankthebernank
spankthebernank's picture

House. Of. Cards.

Mon, 02/06/2012 - 16:30 | 2131657 CalibratedConfidence
CalibratedConfidence's picture

keeping the topic relevant

Mon, 02/06/2012 - 16:32 | 2131662 Gubbmint Cheese
Gubbmint Cheese's picture

lolz - look at all of that liquidity!

Mon, 02/06/2012 - 16:32 | 2131667 NotApplicable
NotApplicable's picture

Flames of Hell?

Mon, 02/06/2012 - 16:33 | 2131674 CClarity
CClarity's picture

If they would institute a 1 cent, penny, $.01 fee/tax on every equity transaction, then HFT trading would slow  (better, a $1 fee) and it would be frightfully obvious that Mom and Pop investors have left the building.  It's all hyper institutional, with much of it simply algo now. Has nothing to do with investing and that should scare the hell out of organizations that actually need stable capital vs trading transactions.

Mon, 02/06/2012 - 17:05 | 2131814 Comay Mierda
Comay Mierda's picture

yea thats a great idea. give more tax money to the govt because they are spending current tax money so wisely. lets reward their healthy fiscal discipline and give them a raise.

here's a better idea. close the revolving door between the SEC/FINRA and goldman suchs/jpmorgue/morgan stuckups/etc and enforce common sense regulation already on the books. then we can talk about a raise

Mon, 02/06/2012 - 18:27 | 2132133 lasvegaspersona
lasvegaspersona's picture

I like your thinking. Every time I hear someone say : "legalize xxx and tax the hell out of it" I say exactly what you have said....."why because the government needs more money to waste?" I really really wish the government would go away.....starved or hyperinflated or ignored....when did we completely loose control???What a world I'm leaving behind...what an awful mess.

Mon, 02/06/2012 - 22:30 | 2132692 PhilofOz
PhilofOz's picture

Governments are going to collect taxes anyway, so the penny they would take on each transaction that slows this HFT down only hurts the banksters, and might mean a penny less each time that they take from the 99%, so why are you pushing for Wall Street banksters to continue vacuuming up anything else left that they don't already own? Tobin Tax AND closing that revolving door!

Mon, 02/06/2012 - 17:26 | 2131919 leftcoastfool
leftcoastfool's picture

Why not impose a "holding time" requirement.  Once you place a bid you can't retract it for 5 seconds (or whatever length of time would create a more level playing field)?  That would also kill HFT churners without punishing everybody else with a new tax...

Mon, 02/06/2012 - 17:46 | 2131997 VelvetHog
VelvetHog's picture

Ding ding ding ding...we have a winner!

Tue, 02/07/2012 - 00:52 | 2132976 pan-the-ist
pan-the-ist's picture

Spoken like a true Luddite.  I've said it before and I'll say it again.  This is the future.  HFT is here to stay as an example of a truly efficient market finding prices.  You're just jealous because you cannot find buyers and if you do you don't get any arbitrage... tough shit, I want to be a cobbler, but guess what- nike made it cheaper for people to buy new ones than get there old ones fixed.

(BTW, I really don't want to be a cobbler  I have a job where I make things more efficient.)

Mon, 02/06/2012 - 17:59 | 2132052 JPM Hater001
JPM Hater001's picture

Stop trying to tax solutions.  Shame on everyone who up arrowed.  The practice is fundamentally unfair.  THAT needs to be changed- better yet no allowed.

Put a fee on it they will just find a way around it.

Mon, 02/06/2012 - 20:09 | 2132400 ljag
ljag's picture

Am I reading this right? ZHr's trying to 'fix' the system? Are you mad? There is no fix for this shit. Total re-set baby and nothing less. Start over with some sort of legal bartering and go from there........that's it. Nothing else makes sense.

Mon, 02/06/2012 - 18:03 | 2132062 au_bayitch
au_bayitch's picture

Clarity, I have none. I have often wondered why someone who takes a risk on an investment over a long period of time, like a 20 year real estate venture, is in the same capital gains arena as a mainframe trading over a very short time frame. I have no clarity why income taxes are indexed but capital gains time periods are not.

Signed,

A non-elite equity investor person being screwed at tax time

Mon, 02/06/2012 - 18:54 | 2132208 Abitdodgie
Abitdodgie's picture

Why the fuck are you paying tax , you like killing people around the world , people like you should be ashamed.

Mon, 02/06/2012 - 23:21 | 2132814 brettd
brettd's picture

Roger that.

Reducing/eliminating your tax bill is far more satisfying, and productive, than voting.

 

 

Tue, 02/07/2012 - 00:33 | 2132946 Cathartes Aura
Cathartes Aura's picture

oh hell yes!

+ & *nod*

Mon, 02/06/2012 - 18:12 | 2132092 falak pema
falak pema's picture

now you know why ALL governments should be pushing for Tobin Tax, not just France and Germany. Screw Cameron and City!

It's vitally important AND to regulate all naked derivative plays, banning all OTC derivatives which are nOT regulated and kicking the teeth out of ISDA, banksta czars. That should help for a start, then the banksta prosecution to follow.

Mon, 02/06/2012 - 20:09 | 2132398 sun tzu
sun tzu's picture

We need to punish honest investors in order to punish the Wall Street moneymen. Most of these HFT orders are never executed. 

Why not just outlaw HFT, unless they are allowing these crimes to continue and using HFT's as an excuse to tax everyone else. 

Tue, 02/07/2012 - 00:55 | 2132981 pan-the-ist
pan-the-ist's picture

Why not outlaw cars and make every drive horse and buggy?  It would make the horse farmers more money.,

Mon, 02/06/2012 - 16:34 | 2131677 GoldenTool
GoldenTool's picture

That's awesome and scary at the same time.

Mon, 02/06/2012 - 16:34 | 2131679 SillySalesmanQu...
SillySalesmanQuestion's picture

Looks like a out of control fire consuming a building...impressive Tyler. Thank you.

Mon, 02/06/2012 - 16:50 | 2131754 BoNeSxxx
BoNeSxxx's picture

That's exactly what it is... only difference is that it isn't a building that's being consumed...

Mon, 02/06/2012 - 16:56 | 2131786 SillySalesmanQu...
SillySalesmanQuestion's picture

+1

Its all of us!

Mon, 02/06/2012 - 18:11 | 2132091 Al Gorerhythm
Al Gorerhythm's picture

No it ain't. Heh heh heh.

Mon, 02/06/2012 - 16:42 | 2131682 non_anon
non_anon's picture

trance to the graph

http://www.youtube.com/watch?v=t98IWdc-Zb0

There have always been ghosts in the machine
How do we explain this behavior?
Random segments of code?
Or is it something more......

Mon, 02/06/2012 - 16:59 | 2131684 Zola
Zola's picture

wow this is brilliant, something definitely changed in 2011 - I could also notice some mini regime changes before. Could anyone provide more info as to what exactly these charts would represent ?

Mon, 02/06/2012 - 16:42 | 2131685 GeneMarchbanks
GeneMarchbanks's picture

Black Box loves you honey...

Pure hypnosis.

Mon, 02/06/2012 - 16:36 | 2131688 Marge N. Callz
Marge N. Callz's picture

Can you set that to music please? Toccata And Fugue In D Minor should work nicely.

Mon, 02/06/2012 - 16:56 | 2131787 GoldmanSux
GoldmanSux's picture

No, it's Black Sabbath War Pigs

Mon, 02/06/2012 - 17:00 | 2131809 Flakmeister
Flakmeister's picture

Brokers gathered in their masses....

Mon, 02/06/2012 - 17:49 | 2132008 Zero Govt
Zero Govt's picture

it's the sonic sound signature of stampeding Herd, sorry Hedge, Funds

Mon, 02/06/2012 - 18:33 | 2132151 lasvegaspersona
lasvegaspersona's picture

but cacophony near the end...having lost all rhythm, melody and proceeding in random time signatures using imaginary numbers "the center cannot hold"

Tue, 02/07/2012 - 01:22 | 2133008 Cathartes Aura
Cathartes Aura's picture

I'm going with an old Chemical Bros. track, The Sunshine Underground - it's a nice slow build, gets going at about 3.5min in, perfect for the colour spikes - but yeah, the towards the end with the cascading beat samples, say from about 5min in - just played it watching the spikes, *grins*

http://www.youtube.com/watch?v=IykWbUVDWL8

great chart, thanks Tylers.

Mon, 02/06/2012 - 18:08 | 2132083 TheFourthStooge-ing
TheFourthStooge-ing's picture

Per Flakmeister:

Brokers gathered in their masses....

Worshipped by Cramers and Kasses.

Evil algos of destruction,

sorcerers of banks' construction.

In the Hamptons, bodies whoring,

as the churn machine keeps warring.

Debt corruption like a haze,

loots all the 401Ks.

Oh Lloyd yeah!

 

 

Mon, 02/06/2012 - 18:13 | 2132102 Flakmeister
Flakmeister's picture

Well done...

 

Mon, 02/06/2012 - 20:46 | 2132479 Jumbotron
Jumbotron's picture

+1000 Paranoid Fairies that Wear Boots !!! 

Tue, 02/07/2012 - 00:21 | 2132927 Vendetta
Vendetta's picture

evil minds that plot destruction

 

Mon, 02/06/2012 - 17:45 | 2131989 VelvetHog
VelvetHog's picture

Symptom of The Universe

Mon, 02/06/2012 - 18:00 | 2132056 TheFourthStooge-ing
TheFourthStooge-ing's picture

Rehypothenoid

 

Mon, 02/06/2012 - 16:36 | 2131692 Motley Fool
Motley Fool's picture

What a brilliant .gif :D

Thanks, Tyler.

Mon, 02/06/2012 - 16:37 | 2131696 Rastadamus
Rastadamus's picture

If it's fire....... LET IT BURN!!!!!

Mon, 02/06/2012 - 17:51 | 2132015 Zero Govt
Zero Govt's picture

Yeah maybe it's the markets turning to Hell

Burn MF'er Burn

..anything and everything does around New York bwankers ..weird

Mon, 02/06/2012 - 16:51 | 2131698 I should be working
I should be working's picture

You know what else might explain what was broken on downgrade day?

The fact that the announcement was on Friday after trading stopped, when the market went berserk 2 days earlier.  S&P clearly leaked the downgrade in advance (either that or Obama's admins did it once they were served).  The public announcement after trading was stopped for the weekend could not have been better engineered to start a market crash.  Big players knew in advance and profited by going short on the market.  

I forget how many points exactly the DOW was down the following Monday, it was at least 500. What I would like to see is an analysis of the short interest in the market starting the Tuesday before the downgrade until the Monday after the announcement.  How this slipped under the radar is beyond me, the WSJ did a tiny piece about an investigation over insider trading, but the whole thing disappeared.

Mon, 02/06/2012 - 17:33 | 2131941 rosiescenario
rosiescenario's picture

Well the guys at the SEC are glued to the Mexican midget wrestling porn and just do not have the time to look at what is happening in the market....

Mon, 02/06/2012 - 20:11 | 2132404 sun tzu
sun tzu's picture

Some people think we need to hire more SEC regulators to watch porn

Mon, 02/06/2012 - 16:41 | 2131707 fnordfnordfnord
fnordfnordfnord's picture

Maybe eTrade ran a commercial that day and got everyone to join? Sort of like when AOL unleashed their hoardes upon USENET*

* http://catb.org/jargon/html/S/September-that-never-ended.html

Mon, 02/06/2012 - 16:43 | 2131710 navy62802
navy62802's picture

My guess ... someone on the inside made a shit load of money in those chaotic days.

Apparently the plan worked beautifully, as we are still here six months or so later trying to figure it out.

Mon, 02/06/2012 - 16:44 | 2131716 zilverreiger
zilverreiger's picture

Does anybody have a legend or scale please? 1500 * what?

Mon, 02/06/2012 - 16:45 | 2131721 Everybodys All ...
Everybodys All American's picture

I believe that is the time of the day. Military time.

Mon, 02/06/2012 - 16:49 | 2131739 Cognitive Dissonance
Cognitive Dissonance's picture

I think he's asking about the vertical scale, not horizontal.

I have no idea.....other than knowing that 1500 is three times greater than 500 and 10 times greater than 150.......the apparent average when the movie (.GIF) started. :>)

Mon, 02/06/2012 - 16:54 | 2131776 hack3434
hack3434's picture

Quotes/bids per milli/microsecond?

Mon, 02/06/2012 - 16:52 | 2131763 JohnG
JohnG's picture

Quotes per second.

Mon, 02/06/2012 - 16:53 | 2131772 JohnG
JohnG's picture

Probably in thousands.

Mon, 02/06/2012 - 16:44 | 2131717 VonSalza
VonSalza's picture

Beautiful

Mon, 02/06/2012 - 16:44 | 2131719 falak pema
falak pema's picture

TD : Some time ago ZH posted a thread where it said that HFT was under regulatory investigation and thus a THING OF THE PAST. I remember clearly that ZH became famous for having being the first blog to denounce these high powered shenanigans on the Net. 

I assumed tht it would end; this legal action would take away this fundamentally flawed technique giving unfair advantage to TBTF parties on both sides of the pond and now international practice. 

Now your current post shows this was just false mirrors and pseudo regulatory procedure, once more, left hand operation by regulators. 

AM I right or have I missed something?

Mon, 02/06/2012 - 16:49 | 2131751 GeneMarchbanks
GeneMarchbanks's picture

70% of trading is HFT, how you gonna stop it?

Mon, 02/06/2012 - 16:55 | 2131765 falak pema
falak pema's picture

rhetorical if left unregulated. Regulating GS on Greek swaps is like swapping punches with world champ in his training camp...you get black eye.

Mon, 02/06/2012 - 17:02 | 2131815 GeneMarchbanks
GeneMarchbanks's picture

Who's going to regulate? These fine people:

http://www.youtube.com/watch?v=5ir_mKso_qc

Mon, 02/06/2012 - 17:04 | 2131821 falak pema
falak pema's picture

the same who  put them behind bars; the USA government has all the instruments but not the will. Nuance!

Tue, 02/07/2012 - 00:38 | 2132959 Vendetta
Mon, 02/06/2012 - 16:50 | 2131755 Tyler Durden
Tyler Durden's picture

Alas, we put a modicum of faith that the US regulators may for once do their job. We were fatally wrong to escape our usual cynical mindset.

In other news, remember when the Fed was investigating Goldman for those Greek currency swaps? That was a damn fine investigation...

Mon, 02/06/2012 - 17:21 | 2131897 NotApplicable
NotApplicable's picture

That'll teach ya to mainline Hopium!

Mon, 02/06/2012 - 17:51 | 2132016 slewie the pi-rat
slewie the pi-rat's picture

boy!  i'll tell ya, tyler! 

brownie did a helluva job there, didn't he?

Mon, 02/06/2012 - 22:54 | 2132753 JW n FL
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.

http://www.federalreserve.gov/faqs/about_14986.htm

 

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

Mon, 02/06/2012 - 21:48 | 2132602 Everybodys All ...
Everybodys All American's picture

and Lloyd Blanklook himself.

Mon, 02/06/2012 - 16:45 | 2131723 Cognitive Dissonance
Cognitive Dissonance's picture

Someone should alerts the frogs that the water temperature is near boiling.

Time to exit stage up.......and out.

Mon, 02/06/2012 - 22:55 | 2132758 JW n FL
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.

http://www.federalreserve.gov/faqs/about_14986.htm

 

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

Mon, 02/06/2012 - 16:46 | 2131726 AldoHux_IV
AldoHux_IV's picture

With the retail investor out of the equity market, at least we now have a visual representation of the perceived liquidity in the market.

Mon, 02/06/2012 - 16:46 | 2131727 LouisDega
LouisDega's picture

I just got back from pinching a loaf. Let me check the markets. I will be back

Mon, 02/06/2012 - 16:47 | 2131734 Id fight Gandhi
Id fight Gandhi's picture

People still need reminding of this.

Likely nothing will be done until it crashes hard

Mon, 02/06/2012 - 17:05 | 2131825 blu
blu's picture

And nothing will be done after it crashes really hard, either. HFT will then be the only pulse left in the monster. They keep it alive to give CNBC something to blather about is the only reason.

Mon, 02/06/2012 - 16:47 | 2131735 Jason T
Jason T's picture

I don't even know where to begin trying to understand this.. wtf is going on out there?

Mon, 02/06/2012 - 16:48 | 2131743 Cheesy Bastard
Cheesy Bastard's picture

Yup, it looks like someone threw gas on the fire on Aug. 5.  Upon further reflection, that is what actually happened.

Mon, 02/06/2012 - 16:50 | 2131744 _ConanTheLibert...
_ConanTheLibertarian_'s picture

Looks like an ET invasion picked up by SETI. Mars bailout coming?

Mon, 02/06/2012 - 19:18 | 2132265 ChrisFromMorningside
ChrisFromMorningside's picture

It's the "Wow!" signal. As in "Wow! Better get the hell out of these markets before they blow!"

Mon, 02/06/2012 - 16:49 | 2131745 ghostfaceinvestah
ghostfaceinvestah's picture

Speaking of volume

Mon, 02/06/2012 - 16:52 | 2131748 LouisDega
LouisDega's picture

Yea, , Its off the lows alright. That analysis is on da house

Mon, 02/06/2012 - 16:49 | 2131750 Conax
Conax's picture

This is what I love about ZH- that is a perfect illustration of market swamping HFT and a reminder that the downgrade really was our Waterloo. Big funds have rules about creditworthiness that forced the banking institutions to keep the 'market' alive via millions of tit for tat trades.. is that about it?

Trying to understand here.

I always thought a small transaction fee was a good idea, now I'm pretty sold on it.

 

Mon, 02/06/2012 - 17:56 | 2132037 slewie the pi-rat
slewie the pi-rat's picture

that will be 5 cents, please

Mon, 02/06/2012 - 18:42 | 2132179 Conax
Conax's picture

LoL-

 

Uhh, I'll have that nickel tuesday,

or would you like a check?

 

Mon, 02/06/2012 - 16:50 | 2131757 PSEUDOLOGOI
PSEUDOLOGOI's picture

I wonder what sound(s) or song you'd get if you fed these charts into sound generating software.

 

Sort of the tune of the market...

 

And don't tell me it's life support machine sounds... LOL

Mon, 02/06/2012 - 16:59 | 2131804 blu
blu's picture

it sounds just like a train wreck

Mon, 02/06/2012 - 17:54 | 2132027 Buttertooth
Buttertooth's picture

There is a guy who is "playing" tree rings.  He uses a laser to read the subtle differences in density and color and the information is converted into notes on a piano.  I wish I could remember the name....

Tue, 02/07/2012 - 01:40 | 2133029 Cathartes Aura
Cathartes Aura's picture

here ya go Buttertooth:

Created by German artist Bartholomäus Traubeck, Years takes the annual rings that you find in cross-sections of trees and converts them into piano music.

http://io9.com/5879326/a-machine-that-turns-a-trees-rings-into-a-musical...

good vid showing the machine "reading" the rings. . . thanks!

Mon, 02/06/2012 - 19:41 | 2132330 MachoMan
MachoMan's picture

I'm thinking something kind of like bohemian rhapsody...

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