Today we should all be cheering. The Dow closed up 121 points — a new (yawn) record high. But all is not well in stock-land.
Pity poor Anadarko Petroleum Corporation (APC).
At 3:59:59:10 p.m. this afternoon, APC was worth $45 billion. 50 milliseconds later, the company was worthless. As evidence, I present the following chart courtesy of Bloomberg:
The area circled in red shows the value of APC dropping from over $90/share to $0/share in 50 milliseconds.
We may laud the great bull market of 2013, cheer the daily all-time highs, and toast the 120% gains achieved since the market’s nadir in 2009. But when you sweep away all the celebratory confetti, you see a system that is extremely vulnerable. This flash crash was not in some $2 stock with 32, 000 shares trading each day. It was Anadarko-freaking-Petroleum — a stock with an average daily volume of nearly 4 million shares.
But, no worries. I was just notified by DECS that all trades below $87.56 “will be busted. This decision cannot be appealed.”
Hey! Why fix the system when you can simply bust trades that occur because your system is a joke.
Speaking of jokes… Two HFT algorithms walk into a bar…