Friday, December 31, 2010

One Defining Moment of 2010 - May 6, 2010

It was the day of the Flash Crash. I was sitting in front of the computer, trading. Dow was down something like 400, slowly grinding downward all day. And all of a sudden the floor dropped. I thought a nuclear war must have broken out somewhere. Thank you algo bots for the scare much bigger than when Lehman Brothers went down. Back then, we knew what had happened (Lehman went bankrupt). But in May 6, there was absolutely no news that could have triggered the drop. I didn't feel any sense of someone, something, buying to support the market. None.

That particular date and time, the Senate was debating Bernie Sanders' bill on auditing the Federal Reserve. The Flash Crash clearly scared the s--t out of the Senators including Mr. Sanders, who opted for a much weakened version of the bill. That was convenient for the banksters, wasn't it? In addition, it was particularly good for the High Frequency traders who had gone short the week before and were doubling down on shorts that week.

Then, just as fast a Flash Dash happened, taking the indices back up very rapidly. No rhyme nor reason, both ways, that the carbon-based life-forms could comprehend. Many small retail investors couldn't access their accounts. I couldn't, though I wanted to buy. That's when I finally thought enough was enough, screw this. This ain't no market any more, where information is exchanged to assess the value of a company and allocate capital accordingly. The market is totally controlled by the algo bots, and they are used to bring about the desired outcome for the powers that be.

The Flash Crash of May 6, 2010 showed all who cared to see what a sham the whole edifice of capital markets had become.

For the record, this is a recording of the S&P500 pits that day, that moment. It was linked at Zero Hedge.

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