Seek and Destroy Trading Bots Killing Us

We are mad as hell.  The markets are rigged,

It had enabled a massive amount of predatory trading and had institutionalized a systemic and totally unnecessary unfairness in the market and, in the bargain, rendered it less stable and more prone to flash crashes and outages and other unhappy events. – Michael Lewis,  Vanity Fair

Check out the price action in natural gas futures last Thursday evening, the same night of the dollar flash crash.   We are sick and tired of this blatant market manipulation and a lot poorer from it.

We put on a short position in nattie Thursday night before driving back from Sacramento to the Bay Area.   We checked the market at dinner and see its down about 1 percent, we feel happy and give high fives.   Then we look at the position and we have none!

It was taken out (buy stop) as  a Seek and Destroy Bot came in around around 9 pm, guns the market to the upside to take out all the buy stops of the short sellers, then turns around and guns it to the downside to destroy all sell stops of longs.  Finally,  moves the market back to where it was before the all the nonsense began.  Not a bad day’s work for the robot.

Nattie’s total move in those few minutes last Thursday evening was almost 4 percent or almost 7 percent of the entire 59 percent move up in natural gas futures for the entire year.  This is total B.S.!

This is not the first and only time we have lost money due to market manipulation.   Remember the AP Twitter hack in April 2013, where

Wall Street collided with social media on Tuesday, when a false tweet from a trusted news organization sent the US stock market into free fall.

The 143-point fall in the Dow Jones industrial average came after hackers sent a message from the Twitter feed of the Associated Press, saying the White House had been hit by two explosions and that Barack Obama was injured. The fake tweet, which was immediately corrected by Associated Press employees, caused a sensation on Twitter and in the stock market.  – The Guardian

That one cost us big as our long stops were hit.

It really angers us that the CFTC and SEC are not more aggressive on this crap.   Didn’t we just have a Presidential election on all things rigged?

But, hey, we have the best government money can buy and, it seems to us, big money has bought the government agencies charged with protecting the public and that “bought” allows the Bots to seek and destroy the little guys like us, no?

It also really pisses us off when we hear that the exchanges sell the stop-loss order info to the type of firms engaged in this blatant market manipulation.  Makes us kind of feel like Gregor Samsa.  Kafkaesque!

We don’t want to engage in fake news so don’t quote us on the exchange selling info to the HFTs.  We cannot confirm it at this moment and will get back to you on this one.

We can no longer spend 23/5 watching the markets, which seems to be the necessary condition these days to protect yourself,  and are reassessing and rethinking are long-term strategy for the new year.

John Henry,  we feel your pain!

John Henry: The Steel Driving Man

A West Virginia Legend

retold by

S.E. Schlosser

Now John Henry was a mighty man, yes sir. He was born a slave in the 1840’s but was freed after the war. He went to work as a steel-driver for the Chesapeake & Ohio Railroad, don’t ya know. And John Henry was the strongest, the most powerful man working the rails.

John Henry, he would spend his day’s drilling holes by hitting thick steel spikes into rocks with his faithful shaker crouching close to the hole, turning the drill after each mighty blow. There was no one who could match him, though many tried.

Well, the new railroad was moving along right quick, thanks in no little part to the mighty John Henry. But looming right smack in its path was a mighty enemy – the Big Bend Mountain. Now the big bosses at the C&O Railroad decided that they couldn’t go around the mile and a quarter thick mountain. No sir, the men of the C&O were going to go through it – drilling right into the heart of the mountain.

A thousand men would lose their lives before the great enemy was conquered. It took three long years, and before it was done the ground outside the mountain was filled with makeshift, sandy graves. The new tunnels were filled with smoke and dust. Ya couldn’t see no-how and could hardly breathe. But John Henry, he worked tirelessly, drilling with a 14-pound hammer, and going 10 to 12 feet in one workday. No one else could match him.

Then one day a salesman came along to the camp. He had a steam-powered drill and claimed it could out-drill any man. Well, they set up a contest then and there between John Henry and that there drill. The foreman ran that newfangled steam-drill. John Henry, he just pulled out two 20-pound hammers, one in each hand. They drilled and drilled, dust rising everywhere. The men were howling and cheering. At the end of 35 minutes, John Henry had drilled two seven foot holes – a total of fourteen feet, while the steam drill had only drilled one nine-foot hole.

John Henry held up his hammers in triumph! The men shouted and cheered. The noise was so loud, it took a moment for the men to realize that John Henry was tottering. Exhausted, the mighty man crashed to the ground, the hammer’s rolling from his grasp. The crowd went silent as the foreman rushed to his side. But it was too late. A blood vessel had burst in his brain. The greatest driller in the C&O Railroad was dead.

Some folks say that John Henry’s likeness is carved right into the rock inside the Big Bend Tunnel. And if you walk to the edge of the blackness of the tunnel, sometimes you can hear the sound of two 20-pound hammers drilling their way to victory over the machine.