Circuit Breakers

Another day, another circuit breaker triggered. But this time not in some cheap Chinese fraud, but in "legit" hospital company Community Health Services, which is plummeting following the announcement of a lawsuit filed by Tenet "claiming the rival hospital operator improperly admitted patients to overbill insurers including Medicare." The stock has now been halted not once... not twice... but three times. And every time it is opened, freefall resumes. The chart says it all: and yes, not even the brilliant SEC contraption of circuit breakers can't do much if anything to prevent reality finally meeting anti-gravity.

So much for that $25 million EGPT ETF as being a leading indicator. AP dscribes what can only be summarized as the funniest plunge-protection free market reopening in history: "Shares on Egypt’s stock exchange plunged Wednesday as the market
reopened after being shut for nearly two months because of the mass
protests that toppled former President Hosni Mubarak. Egypt’s finance minister was on hand as men dumped confetti on the trading floor to mark the resumption of trading. But within seconds of the opening, trading was once again halted as an intense sell-off drove shares below pre-set limits put in place to slow any sharp declines. The market reopened half an hour later. The benchmark EGX 30 index was trading down 9 percent at 5,137 points by early afternoon, recovering slightly from a drop of nearly 10 percent earlier. Finance Minister Samir Radwan called on investors not to panic." Of course, where some see panic, others may see responsible selling of liquid assets as the clusterflock of black swans is now flying high in the troposphere and following the Gulfstream.

Contrary to expectations that the BOJ would injected "only" JPY2 trillion in its emergency operation earlier, Shirikawa came out with a stunner, putting in a whopping 7 trillion yen into Japanese money markets. From Reuters: "The Bank of Japan on Monday injected a hefty 7 trillion yen ($85 billion) into the money market in a same-day market operation aimed at soothing market jitters after a massive earthquake and tsunami hit northeastern Japan. This was the central bank's first so-called same-day operation since last May, when the Greek debt crisis roiled the global financial markets. BOJ Governor Masaaki Shirakawa said on Sunday that the central bank would provide huge amounts of liquidity to the banking system on Monday, reinforcing the bank's determination to keep markets stable in the wake of the disaster." In the meantime, after the Nikkei has plunged over 5%, and the Topix down by 7%, circuit breakers have been activated on the Tokyo Stock Exchange. Elsewhere, the US plunge protection is hard at work, sending futures surging from the overnight drop, after reality threatened to impose itself. Another masterful showing by Sack Frost.

Core Molding, Nucor Steel, and now Plantronics. Individual flash crashes have become such a daily occurrence that they are expected, in fact hoped for, if merely to confirm that nobody but a bunch of deranged robots is left trading stocks. While you won't hear about it on CNBC, as it may go just a little against the station's puff piece on how HFT is not, like, really all that bad, on Friday, just after 2 pm, the stock price of Plantronics (PLT) plunged from $31 to $24 in the span of milliseconds. And most amusingly, not a single circuit breaker was triggered in the plunge! The reason - the SEC's panacea to SkyNet, which incidentally is never proactive and always reactive, the contraption known as circuit breakers, is only applicable to Russell 1000 stocks. PLT, however, with a 'modest' market cap of $1.5 billion belongs only in the Russell 2000 index, which doesn't have any single-stock circuit breakers tied to it. The result: a whole lot of trades that should have cost the rampant algo millions in losses. But never fear: the Nasdaq steps in and makes life for its clients all peachy (while spitting in the faces of everyone else), DKing all the "clearly erroneous" trades, once again confirming that any price discovery that occurs not in compliance with what the exchanges believe is a fair and honest price have no chance in hell of standing. After all, the ponzi monster must be fed with ever increasing stock "prices" even if such prices are merely in the eye of the beholder, the exchange, and the several robots that do all the trading which #Ref out the second there is a pronounced downtick.

Been a while since people cared about this info. Always good to keep in mind.