Posts Tagged ‘crash’

Inside the Flash Crash Report

Pam Martens points out that in patching up May 6th’s market meltdown by breaking certains trades, “busts” only applied to trades occurring between 2:40 p.m. and 3 p.m. when the stock had moved 60% or more from its 2:40 p.m. price.  "The busts that were allowed covered 5.5 million shares and two-thirds of these trades had been executed at less than $1.00…  half of the share volume in these bizarre trades came from just two firms and half the time they were exclusively trading with each other."  The report – amazingly – never names these firms which had their own bad trades undone by that controversial decision that left average investors with large losses. - Ilene 

Inside the Flash Crash Report

By PAM MARTENS, originally published at CounterPunch

high frequency trading The breathlessly awaited government report that promised to shore up public confidence by explaining why the stock market briefly plunged 998 points on May 6, with hundreds of stocks momentarily losing 60 per cent or more of their value, was released last Friday, October 1.  Its neatly crafted finger-pointing to a small Kansas mutual fund firm which has been around since 1937, was immediately embraced as mystery solved by the stalwarts of the corporate press.  This was done with only slightly less zeal than bestowed on the story of Saddam Hussein’s weapons of mass destruction spun out of the George W. Bush administration.

The New York Times headlined with “Single Sale Worth $4.1 Billion Led to Flash Crash.” The Washington Post went with “How One Automated Trade Led to Stock Market Flash Crash.” The Wall Street Journal led with “How a Trading Algorithm Went Awry.”  Hundreds of similar headlines followed in similarly expensive media real estate.  But as with the rush to war on bogus intel, the corporate press may be further damaging its credibility with the American people by ignoring the dangerous market structure that emerges in a closer reading of this report.

The so-called Flash Crash report was the product of the Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC) and consists of 104 pages of data that is unintelligible to most Americans, including the media that are so confidently reporting on it.  It names no names, including the firm it is fingering as the key culprit in setting off the crash.  Earlier media reports say the firm is…
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High Frequency Swanning – The Crash Camp Takes Over

High Frequency Swanning – The Crash Camp Takes Over

Red Bull Air Race Perth - Training Day

Courtesy of Joshua M. Brown, The Reformed Broker 

Here a Swan, there a Swan, everywhere a Black Swan…

Newsletter writers, hedge fund managers, journalists, bloggers, technicians, fundamental analysts, economists and strategists are joining the crash camp left and right.  Not the bear camp…the crash camp.

I’ve been running around Manhattan all day taking care of business, meeting clients etc.  After scanning today’s articles and blog posts, I can honestly say that I’ve never heard more chatter about an imminent market crash, all at once, in my life.  It’s like the May 6th Flash Crash got everyone in the mood to talk cataclysm all of a sudden.

I’m not one of those guys who takes everything as a contrarian signal.  I abhor knee-jerk contrarianism.  Samuel Lord once said "Do not choose to be wrong for the sake of being different," and I think that’s kind of apropos here.

As avowed contrarian Dougie Kass likes to remind us, the crowd usually outsmarts the remnant when herd mentality takes over.  So what is the herd hearing/ seeing?

* First of all, the macro guys are disturbed by the Euro Zone’s crisis and its ripple effect/ contagion risk.  This isn’t new but it is more pervasive.  And the possibility of a China collapse scares the hell out of almost everyone.

* The technicians and Dow Theorists are grossed out and have dusted off all the 1937 charts again.  Specifically, they are looking at the highly distinct pattern of a big drop (May 6th) followed by a failed rally (euro bailout day’s 4% gap open) followed by another fast sell-off. Richard Russell’s latest missive, in which he tells us that we won’t recognize America by year’s end, will make you want to kill yourself.

* Equity analysts are all pointing to year-over-year comps which will start getting harder now.  They may feel OK about the "E" but they’re shaky about the "P" – will the tax hikes and regulatory headwinds we now face really allow for a high-teens multiple on whatever the earnings turn out to be?

* Bond guys are freaking out about sovereign stuff, obviously.  We’ve transferred corporate risks onto government balance sheets with bailouts, the Piper still awaits his payment in many cases.

*Eddie Elfenbein posted the results of a CNBC poll yesterday in which 40% of respondents predicted a 50% haircut for…
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Contrary Signals Clear Way for Crash

Contrary Signals Clear Way for Crash

Courtesy of Charles Hugh Smith, Of Two Minds 

French military airship

Is the stock market setting up for a sharp decline (a.k.a. crash)? The stupendous disconnect between a V-shaped euphoric market and a disintegrating real economy will be settled sooner or later.

 For your consideration on this first day of 2010, two charts: the 10-year chart of the Dow Jones Industrial Average (DJIA) and a one-year chart of the VIX "fear index." (As always, please read the HUGE GIANT BIG FAT DISCLAIMER below to refresh your awareness that this is not investment advice but merely the freely offered musings of an amateur.)

In early December I (along with many others) noted the deteriorating conditions beneath the widely trumpeted "breakout to new highs" of the past few weeks: A Megaphone Announcing Extremes of Sentiment and Indecision (December 3, 2009) and Bearish Cross in NYSE Volume Suggests Rally Will Crumble (December 4, 2009).

If we look at the past decade in the Dow, the steep V-shaped rebound is clearly visible. This sure looks like a market which is absolutely convinced the U.S. economy is not just on the road to recovery but is already "burning rubber" and shifting into second gear.

Compare this classic V-shaped panic drop and surging euphoria with the choppy, 3-year-long "slope of hope" decline exhibited during the 2000-2002 recession.

The disconnect between the reality of a disintegrating economy propped up solely by unprecedented Federal borrowing, spending, subsidies, giveaways, swag, guarantees, secret intervention in the markets, Fed purchase of Treasury bonds, Fed purchases of toxic-trash mortgage-backed securities, etc. etc. and the market’s euphoria about the "recovery" could not be sharper.

Beneath the "happy story" propaganda about the "recovery":

1. employment is still falling

2. credit/lending is still declining

3. sales and income taxes are still in free-fall

4. commercial real estate is about to crash The Gathering Storm in Commercial Real Estate (CRE) (October 21, 2009)

5. the residential housing market is totally dependent on Federal support of the mortgage market and tax-credit giveaways: The Final Demise of A Speculative Housing Bubble (September 16, 2009)

These are just the highlights of a deteriorating economy propped up by unsustainable Federal stimulus and interventions.

The stock market has priced in a rapid rise in "real growth,"
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ANOTHER CHINA STOCK BUBBLE?

ANOTHER CHINA STOCK BUBBLE?

Courtesy of The Pragmatic Capitalist

Interesting reading here from BNP on the potential of another Chinese stock market crash.  Their approach is interesting as they come to their conclusions using components of the same theories that make up my own work.  I, however, do not believe the Chinese market is in for a crash, but rather believe the “long decay” scenario is far more likely.  It would be highly unusual for two bubbles to form in the same market in such a short period of time – especially when the fundamentals and psychology of the market’s participants don’t justify it.  In fact, it could be called an anomaly since it has never happened before.   Not to mention the fact that we are nowhere near the stampeding euphoric sentiment that always accompanies a bubble:

Amid the current financial crisis, there has been one equity index beating all others: the Shanghai Composite. Our analysis of this main Chinese equity index shows clear signatures of a bubble build up and we go on to predict its most likely crash date: July 17-27, 2009 (20%/80% quantile confidence interval).
 


China_20Bubble

It must be noted that the model gives no indication on what happens after the critical point. It tells us the rise will end, but that might be with a crash or a slow decay.

By the very nature of the model, this result gives us two conclusions. Firstly, there exists a bubble in the Shanghai Composite Index. Secondly, it will reach a critical level around July 17-27, 2009. This will lead to a change in regime which may be a crash or a more gently bubble deflation. An extended version of this note, with a careful assessment of the confidence intervals and comparisons with the previous Chinese bubble ending in Oct. 2007, will be released soon.

 


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Phil's Favorites

Why are Atlantic and Gulf coast property owners building back bigger after hurricanes?

 

Why are Atlantic and Gulf coast property owners building back bigger after hurricanes?

Surf threatens beach houses on Dauphin Island, Alabama, September 4, 2011 during Tropical Storm Lee. AP Photo/Dave Martin

Courtesy of Eli Lazarus, University of Southampton and Evan B. Goldstein, University of North Carolina – Greensboro

U.S. coastal counties are densely populated and extensivel...



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Zero Hedge

Russian And South Korean Fighter Jets Face Off In "Mid-Air Confrontation"

Courtesy of ZeroHedge. View original post here.

For the first time since the fall of the Soviet Union, Russian jets flying through South Korean airspace provoked the South Korean military into a "midair confrontation" that involved firing hundreds of warning shots. All told, South Korean jets fired 360 machine-gun rounds and at least 20 flares, Bloomberg reports.

Three Russian military planes (two Tu-95 bombers and one A-50 airborne early warning and control aircraf...



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Insider Scoop

The Daily Biotech Pulse: Acadia Schizophrenia Drug Fails, Viveve Plummets, Eisai Gets Breakthrough Therapy Designation

Courtesy of Benzinga.

Here's a roundup of top developments in the biotech space over the last 24 hours.

Scaling The Peaks

(Biotech stocks hitting 52-week highs on July 22)

  • Acasti Pharma Inc (NASDAQ: ACST)
  • Apellis Pharmaceuticals Inc (NASDAQ: APLS)
  • Arcturus...


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Kimble Charting Solutions

Is Crude Oil Sending a Bearish Message to the Stock Market?

Courtesy of Chris Kimble.

Crude Oil (NYSEARCA: USO) and the S&P 500 Index (INDEXSP: .INX) have peaked and bottomed together several times in the past 9 months. See points (1) and (2) on the chart above.

In summary, the correlation between Oil and the stock market has been quite interesting and demands investors attention.

Crude Oil has been creating lower highs of late and is breaking price support at (3).

If the correlation remains the same, Crude Oil may very well be sending a bearish message to stocks.

Tricky spot for active investors – careful here.

...

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Chart School

RTT Plus Chart Book (Sneak Peak)

Courtesy of Read the Ticker.

The magic of support and resistance channel lines and how they direct price. Here are some chart disclosed to members via the RTT Plus service. All charts are a few weeks old. 


XAU bound by parallel channel lines.


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Newmont Mining support from Gann Angles.



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US Dollar index (DXY) dominate cycle ...

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Digital Currencies

Cryptos Suddenly Panic-Bid, Bitcoin Back Above $10k

Courtesy of ZeroHedge. View original post here.

Following further selling pressure overnight, someone (or more than one) has decided to buy-the-dip in cryptos this morning, sending Bitcoin (and most of the altcoins) soaring...

A sea of green...

Source: Coin360

Bitcoin surged back above $10,000...

Ethereum bounced off suppo...



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Biotech

DNA testing companies offer telomere testing - but what does it tell you about aging and disease risk?

Reminder: We're is available to chat with Members, comments are found below each post.

 

DNA testing companies offer telomere testing – but what does it tell you about aging and disease risk?

A telomere age test kit from Telomere Diagnostics Inc. and saliva. collection kit from 23andMe. Anna Hoychuk/Shutterstock.com

Courtesy of Patricia Opresko, University of Pittsburgh and Elise Fouquerel, ...



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ValueWalk

Professor Shubha Ghosh On The Current State Of Gene Editing

 

Professor Shubha Ghosh On The Current State Of Gene Editing

Courtesy of Jacob Wolinsky, ValueWalk

ValueWalk’s Q&A session with Professor Shubha Ghosh, a professor of law and the director of the Syracuse Intellectual Property Law Institute. In this interview, Professor Ghosh discusses his background, the Human Genome Project, the current state of gene editing, 3D printing for organ operations, and gene editing regulation.

...

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism

Excerpt:

The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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