04/18/2012 Live Update

[TraderGirl]

spx keeps gapping down intra-day...are financials being dumped??

Went back to look at FAS, and both gaps down on SPX, FAS was dumped....

[Petsamo]

spx...???

The bear flag is looking real good on the daily chart but I have a feeling the prophecy won't come through.
Well, at least I hope not. I'm mostly long.

Your smileys r so funny …

Thanks, I try

[TraderGirl]

FAS looks more bearish...

[BullBear52x]

FAS looks more bearish...

Nice I trade FAS, look here, they took out a leg of SMH, INTC gap reversal. the commanding officer is last to go.

[fehro]

some slow mo entertainment

http://www.liveleak.com/view?i=5c8_1334765491

[edwindes]

thank you Al for your sane and wise comment. you exhibit the tact i lack to stop the petty and hateful things that are being said with the lack of understanding that others on this board may be offended.

[MrMiyagi]

Gap up tomorrow; I got to dump a couple of stocks. Then south to hell.

[Seawaves]

ES

[SWalsh]

TO READ LATER, NOT NOW
Contrary to popular opinion…
Program trading is not necessarily a bad thing.

We are not (I'm not) discussing what has been thought of as a computer making decisions. We are talking about the legitimate jumping ahead of orders and violating the law by placing thousands of bids and offers a second with no intention of those orders being filled and shaving as low as 1/100th of a a 100,000 times with millions of shares a day AND getting paid for with no commission cost AND getting paid to break even in some instances.

<snip>
Then maybe they hired too many “quants,” and HFT high frequency trading firms opened up to take advantage of pennies, arbitraging the bid/ask spreads,
if you will, and other games, on a massive scale, etc…. Then maybe things started going haywire and now we’re in a bit of a mess…. SNAFU

I guess you really haven't been reading my insightful comments. I juxtaposed the entire volatility collapse from exactly the point you just made 3-4 weeks ago. More firms rushed in and will work for almost any profit. Not unlike illegals coming into America, they will build houses and union carpenters can't get work. Something is better than nothing. And 99.9% of traders do not have access to virtual light speed trading or knowledge of orders.

But no need to blame it on a republican or a democrat or a dysfunctional congress, or a disgraced dead dictator.

They are institutionally raping clients!. No one is stopping them. I'm not a republican, but given that we are witnessing the biggest financial crimes in history, as per Professor Black who prosecuted the S&L debacle, it's safe the say it wouldn't be as bad under a republican administration because there was a republican administration that did prosecute some people and the crime is now on steroids not just on Wall Street, but in most areas of this administration from Panetta paying $550 for a Gulfstream 550 to fly him home each weekend. That is a $52 million dollar plane that we pay for.

Who runs the DOJ? That would be the president. Who micromanages every decision? This president. Who is benefiting greatly from Wall Street while claiming he didn't become the president to help Wall Street "Fat Cats"? This president. We can talk about Bush bailing out his buddies too, but I don't see the point. After 3+ years, this democrat president owns this economy and the DOJ that has been "hands off who we bail out".

I see little difference from the rise of National Socialism in Germany or Stalin's destruction of the farm owners - kulaks - that Aleksandr Solzhenitsyn suggested were killed to the tune of 60 million.
We are seeing a tyranny begin in this country. And certain classes have been fed money from markets that get an assist when needed. Much of it is perfectly legal under the National Security Act.

This mkt does not trade freely the majority of the time. I know people who have PhDs that worked for the government under contact for a large amount of money for 2-5 years and can never speak of what they did. They love physicists. Is there a "War Room" that breaks patterns? If I have a brain surgery that has a 25% chance of death or the bet on the War Room, I take the War Room bet. I know how mkts trade. I know how easy it is to make money trading. And I know the interference that is taking place daily now and NANEX showed it with that video of computer activity. Banks might still be insolvent. I read the other day that JPM could not possibly unwind its exposure at this point. They have gotten an assist and the case of stolen code from GS revealed that "in the wrong hands" that code could manipulate the market. We will just never know exactly how.

This isn't just about a growth in computers participating. It's about people being misled that liquidity is always a good thing rather than realizing if a certain class never loses, in a zero-sum game (aside from commissions), that the public is getting screwed. And that was what was removed from the podcast. It is theft and that's what RICO laws were made for.

Wall Street was never an honest place and I can surely attest to that. But when the national John Batchelor show (http://www.wabcradio.com)the other night alluded to the manipulation the FBI is finally beginning to look into and it was stripped from the podcast, I have to question just how free the markets are, as well as ourselves.

"My 2 cents, that's worth 4 cents from experience.And now you know, the rest of the story"

[SWalsh]

thank you Al for your sane and wise comment. you exhibit the tact i lack to stop the petty and hateful things that are being said with the lack of understanding that others on this board may be offended.

If the term "hateful" was referring to my words, you are way off base. These are forensic comments I have made. I know my stuff....amateur traders might be offended by not knowing, but professionals will agree.

[SWalsh]

nice gap down to the 200dma on the 1 minute...

When that happens they are not consider gaps like other ones we normally think of (overnight) as gaps do not occur during a trading day unless trading has been halted. With an index it is a calculation. That SPX has a missing value is due to a calculation for any of a number of reason. If, for example, SPY was trading at 1 PM at 138.00 and the next tick is 137.50 it's not a "gap". It's no different than if it traded at 137.98 and 137.99 was missing. On smaller bars you are seeing gaps. On larger frame they will begin to disappear. Traders, at least not ones that understand the mkt, will say "we have an intraday SPX gap at 138.15 to fill".

[57chevy]

so far goes as planed. I'm still neutral. didn't have a good sleep last night, so I'm very sleepy now, what a boring market.

It is taking only 100 stocks quote stuffs to move SPY 10-12 ticks. I've never seen it this thin.

I am listening to John Batchelor's Sunday night radio show that is syndicated on WABC. So far, I cannot find the 10 minute discussion on High Frequency Trading, the damage it has done, and the FBI investigations.

Mr. Walsh,
I don't post much here but I'm in the habit of seeking out your thought-provoking commentary, especially the facts and insight you provide about HFT. You've stimulated my interest and helped me to grow much more knowledgeable about this important subject. Keep up the good work. HFT is a dreadful affliction. Don't let the naysayers get you down. You're one of the best things about this blog.

[SWalsh]

so far goes as planed. I'm still neutral. didn't have a good sleep last night, so I'm very sleepy now, what a boring market.

It is taking only 100 stocks quote stuffs to move SPY 10-12 ticks. I've never seen it this thin.

I am listening to John Batchelor's Sunday night radio show that is syndicated on WABC. So far, I cannot find the 10 minute discussion on High Frequency Trading, the damage it has done, and the FBI investigations.

Mr. Walsh,
I don't post much here but I'm in the habit of seeking out your thought-provoking commentary, especially the facts and insight you provide about HFT. You've stimulated my interest and helped me to grow much more knowledgeable about this important subject. Keep up the good work. HFT is a dreadful affliction. Don't let the naysayers get you down. You're one of the best things about this blog.

Here is a letter from Tradeworxs, that has helped design trading systems, and the biggest pile of manure as to why HFT is an asset to the mkt. Now this is curious to anyone with a brain cell. They admittedly rarely lose, yet they argue that to hinder their operation would be bad for the mkt.

The commentary below, which is in support of HFT trading, shows the term "Long-term Investor" referenced twenty-two times. It discusses how it does not interfere with the activities of them as well as claims they have lower transaction costs. The term "Short-term investor" is ABSENT!


http://sec.gov/comments/s7-02-10/s70210-129.pdf

Let me give a simple example why the comments about "Program Trading" posted earlier are rather naive. And I do hope the many who hit Cobra's site read this twice and consider that it has not been written by someone who does not know how this "game" works. I'm guessing that 98%+ of people here have never been professional Wall Street traders. I am not one of that number.

The Game Facts: (this example will simplify the effects of HFT on your ability to profit)

1 - The market, less commissions which many HFTs pay little to nothing, has a certain number of winners and losers per day participating. That number has dwindled. An article the other day asked where all the volume has gone and stated we are at lower levels than Dec, 2007.

2 - Of the amount lost in a given day an equal amount is made(for the sake of simplicity we will not consider commissions)

3 - In any given "game" (let's use professional poker and there are 5 tables to play at but this one right now is unique) for someone to positively never lose on a given day they must be able to see every card on the table as they leave the deck in a game of Texas Hold 'Em. They will not win every hand as their cards are not always the best hand. But they know when they will win and can strategically bet in such a way that their winning hands far outweigh the losing ones. Plus, they can fold, but just not every hand they do not win as that would signal something fishy. Yet in the HFT world, a six-shooter is not aimed at your gut under the table so you can not play, or quit, if so desired and there is no one to complain as you are invisible in a computerized world.

Now, you are a short-term player , by definition, in that card game. It can last 4 hours or even 24 hours, but it ends. There is no "long-term". To foolishly, or mistakenly, enter that 1 of the 5 tables where the cards are marked to just one individual is to court financial disaster. There are 4 other tables that are not corrupt in this example, but you do not know of them. To you they are all the same in one casino and your seat is comfortable and the drinks are free and with a smile. As you sit there and continue to play, not realizing that the one player/entity seeing the cards is not taking all the money available, but just a nice profit, so that you remain, you think that you still have a chance to profit. But the winning portion for the remaining players is smaller. It MUST BE as one player is systematically removing chips from the table. Plus, while you are playing, friends of the crooked individual have manged to takeover the remaining 4 tables. There is no place left to go but play in a game that is corrupt, but you don't know it, won't admit it, and naive people tell you that you need to practice on a simulator and come back when you have money again to play with.

You have been setup to be separated from your money and you think it is your inability to play well. And that is metaphorically true for most traders. But now, even the best of traders are having difficulty and their "edges" that they worked hard to develop and use as a framework for consistent profits is the road to perdition. Without the best of money management and a consideration of "I better take a good deal of that profit now (with no reason to) because in 1-5 seconds it could be a loss", you can get hammered.

But none of the above kind of talk, in what I think is a very applicable example, was allowed to be metaphorically discussed in the TradeWorx letter to the SEC. Why? Because they are hoping for, and so far have widely succeeded, in making valid points within the context of "long-term Investors". And why is this important to not discuss the short-term ramifications? Because it is the stated goal of THIS ADMINISTRATION AND THIS CORRUPT (IMO) PRESIDENT to remove speculators from the market and to leave only "Long-term investors". That way, we are back to "Stalin sets the price of grain". And if you can't see the parallels then don't condemn them through a misunderstanding of how the market works and how it is controlled. Read about what took place after the Bolshevik Revolution and consider my points again. For anyone thinking this is paranoia uses it as an excuse for poor scholarship.

Does anyone seriously have a question about HFT activity at this point and how it DEFINITELY has been destructive of the markets? if you do not see the simplicity of this example, and how it relates to the day-to-day institutional rape of the traders and customers, please take the time you spend doing this and consider going to earn a Masters degree in something that interests you, because this "game" is only for those who accept the playing field at any given time. One used to be able to be a great trader and not have to worry that much about outstanding money management as you did well and were highly profitable. Now, if you are on the wrong side of an HFT move that might be told to put the Dow up 100 points this minute, you will not be able to act quickly enough many times to click that mouse that will send in that market order. That is because what you see on the screen may well have happened 1/4 to 3/4s of a second ago, or more, if they are really stuffing quotes towards the record the high of 42,000 quotes in a second to create latency, and your desire to get out at a certain point just caused a loss 5 times in excess if where you had planned to get out of your position.

Anyone stating that Program Trading is not necessarily bad should reconsider their position as they are thinking exactly the way the game wants them to think - "There is still good money to be made", when the fact is that far less is available to the speculator. They have been, and successfully to a degree, marked for destruction. Blog activity across the Internet would seem to back that up as do my conversations with brokers and owners of clearing firms that I speak to.

That radio show the other night (which appears to have been sanitized from WABC, much as former NYSE Grasso's appearance calling HFT "Parasites that should be ripped out", didn't last 24 hours online) discussed that to stop them would destroy the markets, and therefore the entire economy, due to their percent of liquidity in the marketplace now. It's that many other players have been driven from the square that a small cabal controls prices. They have destroyed the markets and the radio guest Sunday night said what is feared is The Law of Unintended Consequences arriving, as nothing like this has ever been seen before. And as I have stated numerous times, Wall Street is necessary for the formation of capital. They hit the WTC for a reason. And they hit not just a Grand Slam, but they knocked it well out of the park. These HFTs are not computerized trading methodologies involved in portfolio strategy. They are theft machines involved in "The Race to Zero" that NANEX writes of. And it is logical to assume that eventually, traders will have as much chance at survival as a Frenchman putting his head up from a trench at The battle of Verdun (10 months and 758,000 French and German casualties and 182,000 dead). My understand is that if you were caught putting your leg up to get hit and be sent home you'd be shot on the spot. Many traders have lost many limbs feeding these banks profits as they should have gone under and been replaced by stronger institutions. Bush fed them and Obama has gorged them.

This is what you face trading daily. Accept it or quit. I hope some reading of this for the first time will consider this presentation of what really takes place and that it helps you understand what you are facing as your TA books won't tell you this.

Good luck....every trader needs a healthy dose.


Thanks, 57Chevy, for your kind words. I hope there are some others that understand one cannot remove government from this because just as in the 1920s when the Fed Window funded the banks, they surely fund the HFTs and those are at least the 5 big banks that, if real estate were not placed on the balance sheets as performing and at higher values, would have been forced to liquidate.

[57chevy]

Let me give a simple example why the comments about "Program Trading" posted earlier are rather naive. And I do hope the many who hit Cobra's site read this twice and consider that it has not been written by someone who does not know how this "game" works. I'm guessing that 98%+ of people here have never been professional Wall Street traders. I am not one of that number.

The Game Facts: (this example will simplify the effects of HFT on your ability to profit)

1 - The market, less commissions which many HFTs pay little to nothing, has a certain number of winners and losers per day participating. That number has dwindled. An article the other day asked where all the volume has gone and stated we are at lower levels than Dec, 2007.

2 - Of the amount lost in a given day an equal amount is made(for the sake of simplicity we will not consider commissions)

3 - In any given "game" (let's use professional poker and there are 5 tables to play at but this one right now is unique) for someone to positively never lose on a given day they must be able to see every card on the table as they leave the deck in a game of Texas Hold 'Em. They will not win every hand as their cards are not always the best hand. But they know when they will win and can strategically bet in such a way that their winning hands far outweigh the losing ones. Plus, they can fold, but just not every hand they do not win as that would signal something fishy. Yet in the HFT world, a six-shooter is not aimed at your gut under the table so you can not play, or quit, if so desired and there is no one to complain as you are invisible in a computerized world.

Now, you are a short-term player , by definition, in that card game. It can last 4 hours or even 24 hours, but it ends. There is no "long-term". To foolishly, or mistakenly, enter that 1 of the 5 tables where the cards are marked to just one individual is to court financial disaster. There are 4 other tables that are not corrupt in this example, but you do not know of them. To you they are all the same in one casino and your seat is comfortable and the drinks are free and with a smile. As you sit there and continue to play, not realizing that the one player/entity seeing the cards is not taking all the money available, but just a nice profit, so that you remain, you think that you still have a chance to profit. But the winning portion for the remaining players is smaller. It MUST BE as one player is systematically removing chips from the table. Plus, while you are playing, friends of the crooked individual have manged to takeover the remaining 4 tables. There is no place left to go but play in a game that is corrupt, but you don't know it, won't admit it, and naive people tell you that you need to practice on a simulator and come back when you have money again to play with.

I'm glad I dropped back to find the above. I think you should consider posting that analysis tomorrow so more can understand this change in the market we have witnessed and how it happened.

[SWalsh]

thank you Al for your sane and wise comment. you exhibit the tact i lack to stop the petty and hateful things that are being said with the lack of understanding that others on this board may be offended.

WOW....this guy sent me a PM, then blocked me, that he hopes I enjoy HFTs, a cavity search, and "pulling a Briebart".

13 posts in 10 months. I just wanted to add this in case she tries to schmooze someone for help. He's an Obama fan and once again, the (in)tolerance of the left shines through. Pretty sad indeed.