Is the stock market going to tank?

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Originally Posted by char

So you are telling me that some guy can really type in a "b" instead of an "m" and he doesn't go over a pre-programmed limit which requires someone elses authorization? Or a big red box with saying: are you sure you want to do this?

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That's the thing. There are numerous trade confirmations and layers of authorization on orders that large. That's why I and a lot of other people are saying this may have been organic, set off by a liquidity halt in the EU.

Here's the IB release:

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Latest IB Notice

To all traders:
Thu May 6 21:49:58 2010 EST

UPDATE TO TRADE CANCELLATION NOTICE



IB has received notice from the venues listed below of their intent to cancel all stock trades executed between 14:40:00 and 15:00:00 which were executed at a price greater or less that 60% away from the consolidated last print in that security at 14:40:00 or prior. Each has also provided notification that this decision cannot be appealed. While we continue to await confirmation from all venues as to which stocks are affected and the break points at which the cancellations will take place, it now appears likely that the information will not be delivered within the timeframe necessary to be posted to your account until the morning. It should also be noted that IB has received no notice from the U.S. option exchanges or futures exchanges as to whether or not they intend to take similar action.



Again, once all relevant information has been determined, IB will act to process any resultant position and cash changes to your account and will provide notification of this action via email and TWS bulletin. As such changes may adversely affect account equity and/or margin compliance, account holders are advised to monitor their accounts and manage their risk accordingly.


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Originally Posted by coreshot-tourettes

That's the thing. There are numerous trade confirmations and layers of authorization on orders that large. That's why I and a lot of other people are saying this may have been organic, set off by a liquidity halt in the EU.

Here's the IB release:

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Meaning someone at citi really wanted to sell a billion instead of a million. So, why would any of the other trades resulting from that decision be invalid.

I don't get it, everyone knows that these algorithms are at work, so suddenly when we don't like the result we get a do over? WTF?

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Originally Posted by coreshot-tourettes

That's the thing. There are numerous trade confirmations and layers of authorization on orders that large. That's why I and a lot of other people are saying this may have been organic, set off by a liquidity halt in the EU.

Here's the IB release:

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Sounds like a NASDAQ problem. :fmicon:


I thought the $INDU was only calculated off resident trade? :p

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Originally Posted by char

Meaning someone at citi really wanted to sell a billion instead of a million. So, why would any of the other trades resulting from that decision be invalid.

I don't get it, everyone knows that these algorithms are at work, so suddenly when we don't like the result we get a do over? WTF?

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A trader could have snapped or tested the system. Easily.. We need a strong regulatory structure for the markets to work. Bring back the Specialist!

Gold getting hit right now.. Interesting.

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Originally Posted by coreshot-tourettes

Everyone knows this same thing was going on right before Lehman blew, right?

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Meaning?

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Originally Posted by woodstocksez

Meaning?

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It's time for another installment of market mumbo jumbo. I like tits in my mumbo-jumboists.

Yup, this is going to do wonders for attracting the retail investor back into the market.

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Originally Posted by Benny Profane

Yup, this is going to do wonders for attracting the retail investor back into the market.

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no kidding, the fact that one error by one person can leads to a 1000 point drop in the dow and send hundreds of stocks and etfs to zero, even if only for a few seconds, doesn't exactly instill confidence in the stock market.

I'm trying to follow along so tell me if I'm missing something. So someone hits b (maybe to their benefit, maybe by mistake) and some shit gets traded at $.01 which would be great for the person doing the buying. But then it's all canceled?
Is it possible that some people make bank while others who were not supposed to get rejected?
Will they also cancel all trades just before and just after?
Are all transactions a public record?

Been buying stock all morning.. Wish me luck.. :tongue:

Shorted bonds

Long oil.

dow is down 165 pts


looks like my dad was right

Why we allow HFT is beyond me. Liquidity my ass.

How anyone can invest in a market that by all appearances seems to be rigged is beyond me.

[/un-sophisticated investor]

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Originally Posted by char

How anyone can invest in a market that by all appearances seems to be rigged is beyond me.

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How people can blow money in casinos they absolutely KNOW are rigged is beyond me. Yet it's a multi-billion-dollar industry.

I think investing always looks easy before you do it, because it's easy to see what you should have done in retrospect and why. But it suddenly gets a lot harder when you have to put your money down.

WSJ

Number of the Week: 29.4 million unemployed and underemployed

Karl Marx was disastrously wrong about a lot of things. But if the job market keeps growing as slowly as it has the past few months — even with April’s 290,000-job boost — the U.S. economy could soon find itself in a place he’d recognize.

In Das Kapital, Marx described a problem he saw in the way capitalist societies function. As companies became more productive, learning to get more from their workers, they would need fewer and fewer of those workers. This would create an “industrial reserve army” of unemployed people, whose desperation to work would keep the fire at the heels of those who had jobs and keep wages in check. As a result, all the added value created by workers would accrue to the owners of the companies.

As Marx put it: “The condemnation of one part of the working class to enforced idleness by the over-work of the other part, and vice versa, becomes a means of enriching the individual capitalists.”


Lately, the U.S. recovery has been displaying some Marxian traits. Corporate profits are on a tear, and rising productivity has allowed companies to grow without doing much to reduce the vast ranks of the unemployed. Not counting temporary U.S. Census jobs, nonfarm employers have added an average of about 143,000 jobs in each of the past three months. That’s just about enough to compensate for the natural growth in the labor force.

The U.S. Labor Department estimates there were 14.6 million people actively looking for a job in the U.S. as of April, 7 million of whom had been searching for more than six months (these numbers aren’t seasonally adjusted). Another 5.9 million wanted a job, but hadn’t searched recently, while 8.9 million were in part-time jobs but wanted full-time work. Grand total: 29.4 million people. Industrial reserve army, anyone?

High unemployment has been good for shareholders, as companies reap the benefits of productivity gains in the form of profits, rather than paying higher wages. Among S&P 500 companies that have reported first-quarter earnings, profits are up 61% from the same period last year. By contrast, the average hourly wage was up only 1.6% in April from a year earlier, not adjusted for inflation.

To be sure, this isn’t necessarily a recipe for class struggle. Many workers are shareholders, too, through pension funds and 401(k) plans. Beyond that, many economists expect hiring and wage growth to come back quickly. If and when that happens, productivity becomes a force for good: The more each person produces, the more wealth there is to go around.

Still, the contrast between executives reporting bumper profits and millions of unemployed trying to make ends meet doesn’t bode well for social harmony and political accord.

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Originally Posted by Benny Profane

WSJ

Number of the Week: 29.4 million unemployed and underemployed

...

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Of course, the roster of businesses isn't static. The unemployed can work out some type of self-employment. Entrepreneurs can create new businesses that provide opportunities for the unemployed. Of course there are barriers to doing those things, and it's a lot easier to state the possibilities than to actually realize them, but the fact is that the article just ignores that aspect of the system.

A couple of years back during the bubble I cited the examples of the '87 crash and the Hunt brothers manipulating the Silver market in a financial thread. Someone admonished me that those things were old news and can never happen again because of safeguards.

This new mess sounds a lot like the programmed trading that caused the '87 crash. As well the manipulation of debt markets and real estate bubble isn't that much different then the silver manipulation. They aren't the exact same thing but functionally they're pretty damn similar.

For me the greatest sign things are about to hit the fan is all the clowns running around saying, 'it's different this time' and 'that can't happen again'. That is the attitude that indicates complete overconfidence like the 'new economy' of the late 90's when shares didn't need actual earnings to support their huge inflated values.

The only thing this market has going for it is people are still wary. At the same time the big hitters are trying to hype a weak market well ahead of it's time.

I wouldn't be surprised if that little crash the other day wasn't just a test to see where weaknesses in the system could be exploited.

Problem is it's a system that is largely policed by within and used to being exploited constantly by those within it and those controlling those within it.

What's most disturbing, or, harmful to the markets in general, is, at this point, we still don't know what happened. http://www.nytimes.com/2010/05/08/bu...rading.html?hp Or, maybe somebody knows, and they just aren't telling us. Either way, if you believe in the theory that the market run up was just a pump and dump scheme to lure the retail investor back in, it was a miserable failure. Somebody jumped the gun big time and screwed the pooch in the butt, because all of the little people who were just now sneaking back into the stock market will flee back to safety, maybe never to return again. Most are boomers who absolutely cannot afford to lose any more capital, now that the end game is rapidly approaching. This is no longer, in any sense of the word, investing. It's not even gambling. It's playing with fire, and only idiots allow themselves to get burned more than once, let alone three or four times. Would you believe the SEC or any other investigator next week when they come up with a story as to how this happened? Not me. There is just way too much systematic corruption today, and our owned politicians have no desire at all to fix this fucking system. The same day that this happened, the politicians working on the so called financial reform bill voted down the provision that large banks should be broken up into more manageable pieces. The argument is that all of this churning of money that benefits no one but the churners will move off shore if we regulate it too much, and this is being used at the same time Euro banks are locking up because their financial system is crashing. Krist.

I'm not a conspiracy theorist, but, I would love to see that FED audit, because I really think that they could easily be behind a lot of the stock market run up. Where else has all of this buying come from?

One indicator I've tried to use for bubble markets is the number of retail accounts opening (Schwab and eturd publish numbers). But those numbers lag so you can't really forecast all that well using them plus there it doesnt account for dormant accounts.

But i am getting some sense from looking at daytrader irc or chatroom channels (very unscientific i know) that the dumb money dice rollers magic-chart juju suckers were coming back to the markets. Therefor liv2skis idea of biasing short side appears pretty good - but then again - who the fuk knows what koolaid the Fed will use to prop this market up. Just when you think they cant possibly print more debt - they do

Be Greedy when others are fearful and be fearful when others are greedy.

People saw Greek rioting on TV and the implications of government spending more that it can "Harvest" from private industry = a nightmare that may be coming true in the US someday soon as well.

But, don't worry Obama and the Congress will investigate the 998 point drop on Thursday and make sure Wall street will be held accountable. Right after Sen Arlen Spector fishes up with the inquiry into the NE Patriots videotaping issue.

Be afraid, contrary to Snoop, the revolution will not be televised.

I don't "trade" often but I allocated 10% of capital to the markets Thursday and Friday putting me at about 50/50. I'll buy more stock in smaller increments if we continues lower. Quality companies have value.

I bought shares of BRK.B on Thursday at $74.05 and some RPMGX for $50.05.

On Friday morning when the market was melting I bought shares of JPM at $40.05 and more BRK.B at $73.35. I also felt the market had skewed some recent trends so I bought for speculation TBT at $39.70 (inverse bond) and USO for $35.99 (long oil futures etf).

As of this morning the trade is up 1%. :) The bond and oil trade is short term, especially the oil. I hope to hold all the other positions for a long time.

I always place orders "at the market" and my executions were amazingly good. That's usually a bad sign for your trades. :fmicon:

I wanted to buy EEM (emerging markets) but just didn't want the additional risk. Maybe Monday!

The stock market has always been dangerous.

Here's what I think happened. Very similar to the 87 crash which was also exacerbated by Nasdaq market makers:

http://thestockmasters.com/node/2203

As it turns out, no smoking gun was found in yesterday's 1,000 point decline:

(CNNmoney) It wasn't a goof. It wasn't human error. Rather, it was an instant that displayed the hazard of new markets that handle billions of dollars' worth of trades each day.

During yesterday's fast-moving midday market, NYSE specialists -- who oversee trading in individual stocks -- used their authority to call a momentary time out. The idea was to bring together buyers and sellers, and get their prices more in line with each other.

It happened in five Dow stocks, including 3M (MMM, Fortune 500) and Procter & Gamble (PG, Fortune 500), according to the NYSE, and in a good number of the listed stocks. The NYSE did not have a tally of exactly how many.

Years ago, when the NYSE dominated trading, such "time-outs" worked well at stabilizing stock prices.

But today, the NYSE accounts for only about 25% of the volume in its listed stocks. The rest comes from computerized markets run by private companies -- and some of those systems did not take a time out yesterday.

"The rest of the markets are free to trade around us," said NYSE CEO Duncan Neiderauer, "and that's what they did."

So, as the NYSE paused for a minute or two at about 2:40 p.m. ET, the off-exchange computers kept searching to execute trades. They hit the best bids still standing, which in many cases were far below the prior price.

And in some cases, the off-exchange computers found no bids at all. When that happens, market-making computers see a zero bid, then offer a penny higher to capture the trade and collect a commission -- hence the trades of just one cent for several stocks, including Accenture (ACN), Boston Beer (SAM), Exelon (EXC, Fortune 500).

"Computers are looking for the best bids. The real best bids shut themselves down," one trader told CNNMoney.com.

"You had penny prints. The bid was zero. The algorithms were designed to penny the bids," said another trader.

The NYSE argues Thursday's sudden plunge shows its model is best suited to maximize market stability.

"Yesterday's experience clearly demonstrates the value of retaining an element of human judgment in the market," said NYSE spokesperson Ray Pellecchia.

But the role of human judgment has been rapidly diminishing in the securities marketplace, placing individual investors at risk of such an instant market meltdown happening again

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Originally Posted by Benny Profane

The argument is that all of this churning of money that benefits no one but the churners will move off shore if we regulate it too much,

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You know a few years back this shit was being used by Canada's big banks to justify why they should be allowed to merge into much fewer but much bigger entities. Otherwise they could never keep pace with the big boys and our financial system and currency would surely suffer was how they tried to spin it.

They were shut down and told to suck it up and try to do things better instead of bigger. (Our system is far more regulated than the US system I believe). Funny thing is that as the big boys crashed and burned because of their money churning, do nothing, profit sucking bullshit our system stayed relatively one of the most stable in the world.

Funnier still. At one point during the crisis one of our biggest little banks found itself among the world's top 10 in assets purely by virtue of holding their full albeit tiny value while worldwide other banks took huge asset hits.

Bigger isn't better unless you're a fat cat CEO just trying to further balloon a ridiculous bonus formula.

Good point on the boomers end game and can't/won't afford another equity hit.

Had an interesting conversation this morning in regards to this last generation in north america and perhaps europe. A lot of emphasis in the last couple of decades has been to train our brightest to be financial and business gurus and maybe lawyers.

So our brightest and most ambitious have focused on new exciting ways to exploit an already overworked financial system. Meanwhile in India and Asia and perhaps others their brightest have been encouraged to become engineers, technologists and those that generally figure out how to make better stuff.

I give the edge to the countries building enough stuff to still allow feeding on their financial systems. Instead of countries producing way too many people trying to feed on fewer people creating things.

I disagree that regulation will move it offshore. On the contrary. I believe NYSE is the big winner here because they have always had the best execution system for small investors.

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Originally Posted by 4matic

The stock market has always been dangerous.

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Yeah, but not like this. They broke a record the other day.

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Originally Posted by 4matic

I disagree that regulation will move it offshore. On the contrary. I believe NYSE is the big winner here because they have always had the best execution system for small investors.

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This is our only hope right now, just as, when the shit hits the fan, Greek style, everybody runs back into our wings for safety. When I hear pundits talk down our deficit and predict hyperinflation armageddon, Zimbabwe style, I can't seeing it happen yet. So many others have to fail first. Trust and safety from it is priceless.

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Originally Posted by Benny Profane

When I hear pundits talk down our deficit and predict hyperinflation armageddon, Zimbabwe style, I can't seeing it happen yet. So many others have to fail first. Trust and safety from it is priceless.

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You know Benny, That is likely a very astute call. What do you think, we have until about 2012:fm:

No. I'm thinking 2018-20.

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Originally Posted by Benny Profane

No. I'm thinking 2018-20.

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Benny, I'm curious to know your rational. looking forward to it.



My gut tells me that the the answer is ... whenever China is ready.

The questions are:
1) How quickly can China create a domestic economy that is not dependent on exports?
2) How quickly can Asia become relatively self sufficient?
They will still need resources [Russia/Canada/Aus/Brazil]
Will they still rely on the US consumer buying cheap shit at walmart
3) At what point will China float the renmindi?
Prices at Walmart may not be as attractive
Imports start to look a lot cheaper in China
4) When does the Chinese consumer begin to spend a 2-3% more annually?

There is a massive global economic imbalance right now.

Maybe when the US starts manufacturing more goods back home, maybe then you'll see some solid job growth, and potential inflation. Right now, any inflation is still a result of stimulus money.


INTERESTING FACT FOR THE DAY
link: http://www.sprott.com/Docs/Marketsat...0Weakness.pdf:

While we have written ad nauseam about the excessive debt issuance by the United States, we found a recent update written by United States Government Accountability Office (GAO) to be particularly instructive. The update noted the US’s budget deficit equivalent to 9.9% of GDP in 2009 - the largest since 1945 - and stated that without significant policy changes the US government would soon face an “unsustainable growth in debt”. This was not news to us. It goes on to state, however, that using reasonable assumptions, “roughly 93 cents of every dollar of federal revenue will be spent on the major entitlement programs and net interest costs by 2020.”8 This is news! In less than ten years, using reasonable assumptions, there will essentially be no money left to run the US government - 93% of all tax revenues the US government collects will go to pay social security, Medicare, Medicaid and the interest costs on their national debt. This implies no money left over for defense, homeland security, welfare, unemployment benefits, education or anything else we associate with the normal business of government. And the US government is rated AAA!?

Who is the GAO?
link: [ame]http://en.wikipedia.org/wiki/Government_Accountability_Office[/ame]
The Government Accountability Office (GAO) is the audit, evaluation, and investigative arm of the United States Congress. It is located in the legislative branch of the United States government.


I'm not a trying to excite fear, just passing on info.

Well, I was just throwing out the timing I would think was somewhat linear after the Euro finally settles and Japan finally deals with it's sad situation. I'm thinking that we will remain the safe sanctuary until then, kinda like the last resort theory. You're right, China is now our Detroit, but, at the same time, the new version of "It's Different Now", because, much of the western world sort of weirdly assumes that the powers that be over there can actually control the economy to the point that they will have a soft landing within the international finance and trading environment. I don't think so. All of this talk of them calling in their loans is absurd. They're our pathetic banker, and we're their Trump, for the time being.

4matic wins the BIG BALLS Award today

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Originally Posted by liv2ski

4matic wins the BIG BALLS Award today

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Heh.. Thanks. It's early though. DAXI closing above 6000 is pretty positive. SP can rally to 1180 unchallenged. I sold USO (oil) @37.05. Didn't like the action.

Still long: JPM, BRK.B, RPMGX, and TBT. Up about 4% on the trade.

I may sell some International MIEIX and Treasury hedged PTTRX. Although, a weaker Euro with backstopped debt is bullish Euro equity.

At the beginning of the year one of my themes was currency re-alignment. We got it.. And this also might explain the weakness in Chinese equity.

A little to quiet for comfort right now.

you played the dead cat perfectly 4matic

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Originally Posted by 4matic

Heh.. Thanks. It's early though. DAXI closing above 6000 is pretty positive. SP can rally to 1180 unchallenged.
A little to quiet for comfort right now.

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Still hanging on 4matic? Pretty much out of the long end except for a Brazilian Fund I own. Bought SDS at $33 on 5/19, sold today at $35. Looks like it may be time to trade this every few days and ride this market down.
Your thoughts guys?

Feel pretty smart after moving assets to safe havens three weeks ago. Now just waiting for a bottom to get back in.

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Originally Posted by powderwhore

Now just waiting for a bottom to get back in.

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I love getting in bottoms. Finally this thread got interesting.

Europe is proving once again that they are incapable of taking decisive action and that nobody is really in charge. These knee-jerk reactions to perceived problems such as short-selling are not helping either. I think today's moves just underscore worldwide lingering uncertainty that Europe could push the whole house of cards back into a liquidity crisis (ala 2008). Somewhat disconcerting as domestic economic indicators have improved and the country could be well into a recovery (though that seems in doubt). Also underscores the need to look at allocations in your account every quarter and adjust accordingly (I don't day trade).

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Originally Posted by powderwhore

Feel pretty smart after moving assets to safe havens three weeks ago. Now just waiting for a bottom to get back in.

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Yeah, I wish I had put my money under the mattress too.

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Originally Posted by liv2ski

Still hanging on 4matic? Pretty much out of the long end except for a Brazilian Fund I own. Bought SDS at $33 on 5/19, sold today at $35. Looks like it may be time to trade this every few days and ride this market down.
Your thoughts guys?

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Take that motherfucking goldman sachs in the ass - July 150er puts liquid as all can be.

My grandpa TIPs are todamoon

I'd add some Elliot Wave and wasabi candlestick mumbo jumbo but I don't believe in any of that anyhow

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Originally Posted by LeeLau

July 150er puts liquid as all can be.

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Lee what are you talking about? This http://seekingalpha.com/instablog/10...ts-take-a-look

Some fan must have mooned the market.

Reggie's rants are quite good. I'm long July 150er GS puts. They have decent volume relative to other GS puts. Does that make more sense?