Either it was a very unlikely and improbable series of events, or a plan carried out by a syndicate of players, foretold by the phantom print on January 11, 2010.
Reuters names e-mini S&P âflash crashâ seller
- Thread starter ASusilovic
- Start date
Again, don't forget that the market shot back up more than 70% within the next 15 minutes after the 1000-point plunge. Had it been a U-shape bounce, my suspicion would not have been aroused. But to say that liquidity providers, both market makers and HFTs, were completely out of the picture during the entire time the market swooned and then suddenly resurface only to take the market back up 70% utterly defies reason. I'm sorry, but this is a fucking conspiracy.
The sell off and deepest drops were in equities caused by algorithmic computer trading by the leveraged ETF's. These ETF's sold relentlessly in order to maintain their 200% and 300% daily tracking target.
When any stock component in their index shows a print 10% down for the day they are trading to target 20% and 30% run downs (For 2x and 3x ETF's).
When they get a print showing 33% down for the day for an index or component stock they need 2x and 3x that (Down 66% and 99%) hence the 0.01 busted trades.
These funds are for the most part on autopilot trading a fixed formula per their prospectus.
Basically any daily drop of a component instrument > 10% will be amplified by the ETF's. The downside has a zero limit where as the upside is unbounded. In an orderly liquid market you see selling pressure and fast drops... In illiquid markets it gets ugly really fast.
Inside of 10% they employ a portfolio of futures, options and have their own pool of private inventory and investors. They tend to run under the radar up to 10%. Once 10% is breached they are very active in the market placing time sensitive orders to maintain and track 2x and 3x the price action.
Even a 5 minute circuit breaker on a 10% limit down isn't going to stop the run down caused by these leveraged ETF's. 5 minutes may by them time to replenish their private pool and reset their hedge but the selling pressure will remain.
When any stock component in their index shows a print 10% down for the day they are trading to target 20% and 30% run downs (For 2x and 3x ETF's).
When they get a print showing 33% down for the day for an index or component stock they need 2x and 3x that (Down 66% and 99%) hence the 0.01 busted trades.
These funds are for the most part on autopilot trading a fixed formula per their prospectus.
Basically any daily drop of a component instrument > 10% will be amplified by the ETF's. The downside has a zero limit where as the upside is unbounded. In an orderly liquid market you see selling pressure and fast drops... In illiquid markets it gets ugly really fast.
Inside of 10% they employ a portfolio of futures, options and have their own pool of private inventory and investors. They tend to run under the radar up to 10%. Once 10% is breached they are very active in the market placing time sensitive orders to maintain and track 2x and 3x the price action.
Even a 5 minute circuit breaker on a 10% limit down isn't going to stop the run down caused by these leveraged ETF's. 5 minutes may by them time to replenish their private pool and reset their hedge but the selling pressure will remain.
Ya really think the idiots at SEC or CFTC know what the hell is going on? Moreover, do you think they really give a shit about small fries like us? otherwise, why the fuck would SEC settle their case against Goldman Sachs for just $5 billion (actually it's between $1 and $5 B)? $5 billion is nothing compared to all the damage Goldman Sachs created.
Come ON, and u all call ur selfs Traders, LOOK at the FX market.
When USD/JPY broke 92.793 level (55 ema) on daily chart the next support level was 87.735.
The HUGE VACUM was to the downside, the biggest carry trade is in the USD/JPY pair, why? safest currencies
If Waddel and another hedgies of Macro fund algo picked on the break of USD/JPY, it was SELL SELLL SELLLL SELLLL time and look out below.
FX is the BIG DOG that wags all tails; here is a list of tails
The bond market keeps one eye on the FX market,
Professional SPOOS traders keep one eye bonds and FX
Oil traders keep eye on all 3
Hedgies and Pros watch all of them
Nubies, wannabees and pikers enter the market without a clue.
Learn to follow the list above and maybe you will become a Professional trader, and not just be lucky trader when its all green lights to the upside.
When USD/JPY broke 92.793 level (55 ema) on daily chart the next support level was 87.735.
The HUGE VACUM was to the downside, the biggest carry trade is in the USD/JPY pair, why? safest currencies
If Waddel and another hedgies of Macro fund algo picked on the break of USD/JPY, it was SELL SELLL SELLLL SELLLL time and look out below.
FX is the BIG DOG that wags all tails; here is a list of tails
The bond market keeps one eye on the FX market,
Professional SPOOS traders keep one eye bonds and FX
Oil traders keep eye on all 3
Hedgies and Pros watch all of them
Nubies, wannabees and pikers enter the market without a clue.
Learn to follow the list above and maybe you will become a Professional trader, and not just be lucky trader when its all green lights to the upside.
Quote from louispino:
FX is the BIG DOG that wags all tails; here is a list of tails
The bond market keeps one eye on the FX market,
Professional SPOOS traders keep one eye bonds and FX
Oil traders keep eye on all 3
Hedgies and Pros watch all of them
Nubies, wannabees and pikers enter the market without a clue.
Learn to follow the list above and maybe you will become a Professional trader, and not just be lucky trader when its all green lights to the upside.
You come around here stating the obvious as your first post that everyone knows already. Does that s'posed to make you special?
I wasn't bitching about the selloff but the ensuing rally. Get a clue for once.
No doubt, 75,000 lots ain't small by all accounts. However, is that enough to act as a catalyst to start an avalanche? With companies on the brink of bankruptcy as in 2008, that would be understandable. But I thought the institutional dicks, morons, and idiots thought otherwise in their collusion with Uncle Sam. Anyway, I've had enough with this thread.
schizo,
my reply was not directed at you, mainly everyone trying to figure what caused the mini/flash crash?
But most traders have blinders to only look at what in front of their screens, L2, 1 min charts, TOS.
Since you stated that traders should of known or seen it coming, cuz they all see markets, i beg to diff. MOST TRADERS don't.
I ur not one of them, then i tip my hat to u.
ps, i have posted on ET at times, for some reasons it clears my posts.
best regards and good luck trading or spinning to all.
my reply was not directed at you, mainly everyone trying to figure what caused the mini/flash crash?
But most traders have blinders to only look at what in front of their screens, L2, 1 min charts, TOS.
Since you stated that traders should of known or seen it coming, cuz they all see markets, i beg to diff. MOST TRADERS don't.
I ur not one of them, then i tip my hat to u.
ps, i have posted on ET at times, for some reasons it clears my posts.
best regards and good luck trading or spinning to all.
