Take your pick--here's three good reasons to engineer a "crash" that benefits the few at the expense of the many.
Gold, Precious Metals Flash Crash Following $2.7 Billion Notional Dump
The last time gold plummeted by just over $30 per ounce (dragging down silver and bitcoin with it) and resulted in a crash so furious it led to a "Velocity Logic" market halt for 10 seconds, was on January 6, 2014.
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We bring this up because moments ago, just before 9:30pm Eastern time or right as China opened for trading, gold (as well as platinum, silver, and virtually all precious metals) flashed crashed when "someone" sold $2.7 billion notional in gold, resulting in a 4.2% or about $50 to just over $1,086/oz, the lowest level since March 2010.
Source: zerohedge.com
Sweden's Largest Fund Manager Is Quietly Dumping Stocks Before The "Herd" Is Caught In A Selling Vortex
Events today showed he was absolutely correct. For the sake of the bulls who looked at the market - which was being pushed up solely due to central bank intervention from the first moment of trading to crush any Greek negotiating leverage a red close may bring - and assumed that there is nothing at all that can dent the artificial, illiquid "bull market" now in its 6th year, let's hope that that is all Storfaelt is correct about, because otherwise the countdown to the next massive market crash, not to mention the next, and probably final global QE involving all central banks, has already begun.
Source: zerohedge.com
A Bubble on Thin Ice
A recent Bloomberg article discusses the fact that most traders active today have never known anything but the era of easy money, and wonders how they will handle the potential end of that era. To this it should be mentioned that the widely expected rate hike cycle may well never begin. The economies of industrialized nations have been severely undermined by loose monetary policy for many years. In concert with over-regulation and over-taxation, this has encouraged ever more capital consumption. “Once the herd stampedes, nothing can stop it.” - Pater Tenebrarum
Source: acting-man.com
“...you showed the broken system that it can be beaten, and explained how. As a result, the only response the broken system had was to put you away for good.”
To remind you, this is what irritated you in the Sarao document: '... Defendants used the Layering Algorithm to place hundreds of orders for tens of thousands of contracts that were modified thousands of times and eventually canceled over 99% without ever resulting in a trade.' As you can see the vast, vast majority of ES contracts just before lunch today was cancelled without ever resulting in a single trade. And, we are confident, since Mr. Sarao is currently either in custody or on bail, without access to the internet, one can't blame today's massive E-mini spoofing on the flash crashing mastermind. Since we are confident you intend to root out this evil market scourge at the root, we are also providing you with examples of spoofing in oil, in US Treasurys, and in gold. Finally, since like you we are confident the investing public's faith in the broken market must be restored at all costs, we will make this article into a daily feature showing every single day the hundreds of thousands of spoofed ES contracts, openly "manipulating" (in your own words), the so-called market. We will stop once you, dear CFTC, have rooted out all the spoofing, all the momentum ignition, all the sub-pennying, all the quote stuffing. In short - the endless manipulation. Now, go get 'em! P.S. if you are unsure who the spoofer is, call us - we will be delighted to tell you: we don't even want the whistleblower award. - Tyler Durden, Zero Hedge
"Defendants' use of the Layering Algorithm and the 188/289-Lot Spoofing intensified throughout the day. At 11:17 a.m. CT, Defendants turned the Layering Algorithm on for more than two consecutive hours, until 1 :40 p.m. CT. During this cycle, Defendants utilized the Layering Algorithm to place five orders, totaling 3,000 contracts. A sixth order was added at around 1:13 p.m. CT, increasing the total to 3,600 contracts.... Between 11:17 a.m. CT and 1:40 p.m. CT, Defendants' actions contributed to an extreme order book imbalance in the E-mini S&P market. This order book imbalance contributed to market conditions that caused theE-mini S&P price to fall361 basis points."
"MIT computer scientists can predict the price of Bitcoin. CSAIL/LIDS team's algorithm doubles initial investment in under two months."
Or you could just lurk the P&D crews on Twitter and double up in 24 hours, every 24 hours by playing the altcoin game.
But fuck it, instead spend millions developing an algorithm that can do the same in two months time!
"They aren't predicting anything other than very short term actions of real buyers and sellers." - Jeff
Back on March 21, before the release of Michael Lewis' Flash Boys and before the infamous 60 Minutes interview, when Goldman COO Gary Cohn wrote his infamous WSJ Op-ed bashing HFT, it was clear that something was afoot. That something became promptly clear when it was revealed that Goldman is among the core backers of the pseudo dark-pool IEX exchange popularized as the protagonist in Flash Boys, and juxtaposed to the frontrunning, and faceless, HFT antagonist that Lewis maanged to demonize so well in the span of a few hundred pages, he promptly provoked a renewed investigation by the FBI, the SEC and DOJ into HFT. A few days later, the shocker became a double whammy when Goldman announced that in addition to turning its back on HFT which had served it so well for years, the firm would also say goodbye to the NYSE and its designated market maker post, the last remaining legacy of its $6.5 billion Spear Ledds & Kellogg acquisition from 2000. Moments ago we got the third and final "shocker" in this series of stunning disclosures by Goldman, this time involving Goldman's own "unlit" venue - one involving its own Dark Pool - the infamous, and market dominant Sigma X, which according to the WSJ, is about to be shut down!
High Frequency Trading Explained
In the aftermath of Michael Lewis' book "Flash Boys" there has been a renewed surge in interest in High Frequency Trading. Alas, much of it is conflicted, biased, overly technical or simply wrong. And since we can't assume that all those interested have been followed our 5 year of coverage of a topic that finally has earned its day in the public spotlight, here is a simple summary for everyone.
Source: zerohedge.com
Lewis Explains The Casino: "Why Are You Even Arguing" That This Is Not Rigged?
Round 2 of the HFT vs Reality death match just took place on Bloomberg TV. Once again the clear winner was Katsuyama and Lewis version of the real world as Manoj Narang finally lost all credibility with the mind-0bumbing comment that "speed matters less in today's market than it has ever mattered." But the Tradeworx CEO was a background singer compared to Michael Lewis who explained in his clearest analogy yet how the casino works and then devoured the anchor's constant efforts to play down the "rigged" market perspective... "it's very clear that people are being front run in the market... so, why are you even arguing about this?"
Source: zerohedge.com
Watch As HFT Debate Devolves Into Epic Screamfest In Milliseconds
The clearly agitated BATS CEO came out swinging, blasting Katsuyama and Lewis "Shame On You," for apparently telling the truth of what occurs in the stock 'market and letting everyone in on it'. The tension grows when he presses Katsuyama on whether he really believes it is rigged... who then erupts "I believe the markets are rigged.. and that you are a part of the rigging." Then the gloves come off "you wanna do this, let's do this!" and then it got worse (or better)...
Just the first 3 minute round in this epic clip is worth the price of admission (and note the floor traders cheers in the background)... but to watch the status quo crushed under the awesome honesty of reality as this is all exposed, watch on...
If you haven't watched "The Wall Street Code", you should.
Source: zerohedge.com
Just another day in the markets, just another HFT algo going completely insane and Nanex catching it in the act.
Source: nanex.net