Interesting read. I don't know enough on this to validate...perhaps someone can chime in. We Now Know What Happened At 6:12 AM This Morning In a day in which the total breakdown of the market and the sheer dominance of various HFT algos was painfully obvious for any remaining carbon-based trader forms to see, we started off with not one but two E-mini trading halts following ridiculous buying slams. This is what we asked first thing this morning: Anyone waking this morning will glance at US equity futures and happily note its unchanged-ness relative to weakness in Asia overnight. But behind the scenes of the last 12 hours was a total and utter farce of price discovery failure. S&P 500 e-mini futures have been halted twice (0551ET anbd 0612ET) in what one market observer exclaimed "looks like manipulation to me." So what exactly happened at 6:12am? We now know. As Nanex shows, what happened at 5:51 am and at 6:12 am, the ES breaks were nothing more than an aggravated case of HFT spoofing - the same infringement which will likely send Navinder Sarao behind bars for years - which first sent the E-mini soaring higher so fast, it broke the velocity logic circuit, and then it smashed the E-mini lower. Here is the first spoofing instance, which prompted Eric Hunsader to declare the manipulator "busted." Indicatively, the entire move amounted to just about 20 S&P points on the way up, or about 0.4%. And the second one: what goes up must come down. In summary: what we do know: a nearly 1% move up and down in the S&P due to blatan - and illegal - spoofing manipulation; what we don't know: the identity of the spoofer. What is certain: if the culprit is a central bank or one of its trading agents like Citadel, the CFTC will never follow up. If it is some Indian living in his parents' basement in a London suburb, you can run but you can't hide.
This is hilarious.... I'm not saying that these events weren't spoofing... but "the price moved really really fast" is not enough to draw the conclusion "manipulator busted" Is it not possible that someone sent a large legit order... and a bunch of legit algorithms overreacted?
Nanex didn't disappoint - pretty pictures and worthless logic. It's like the goldbugs who say every move up is the natural tendency of gold to appreciate and every move down is Evil Bankster Manipulation.