The Near 1,000 Point Slide of the DJIA Compels Further Investigation of the Wall Street Casino Scam

[Joanne98]

Yesterday’s slide in the US stock markets provides further proof that the world’s financial markets are nothing more than a rigged casino where the house (Wall Street) holds by far the better odds in every game (currency markets, stock markets, derivative markets, commodity markets) it offers the mark (the retail investor). How else could the US DJIA lose 700 points in a 10-minute span and a number of blue chip stocks lose 25%, or 30% in a matter of minutes as well? The answer? Wall Street’s use of predatory algorithmic High Frequency Trading (HFT) programs that are designed to trigger cascade-like buying and selling. To believe that, as an individual investor, you have a snowball’s chance in hell of beating these Wall Street trading programs that front run your trades or block your trade executions faster than you can blink your eye is tantamount to believing that skill is involved in winning when you shimmy up to the slot machine stool at the Bellagio in Vegas.



Predatory algorithmic HFT programs aren’t called “predatory” without good reason. Not that yesterday’s selloff wasn’t partially the result of fear injected into a Fed Reserve inflated stock market bubble, because it was. But Wall Street deployed HFT programs had a lot to do with the cascading nature of the decline in yesterday’s trading. Continuing our casino analogy, HFT programs act in the same capacity as the thugs employed by casinos that take you to the back room to rain down their “thuggery” upon you if you start winning too much. HFT programs are designed to block the retail investor from making successful trades against the trades of the house (Wall Street) and often prevent the retail investor from obtaining fair prices in the execution of trades in numerous financial markets.



Consider the following example. Stock A’s bid is $10.10 and the ask is $10.13. An investor places an order to buy at $10.13. Instead of his order being filled and executed as it would if human traders were executing the trade, HFT programs often immediately step up the ask price to $10.14 and screw both parties in the trade. Depending on the orders that HFT programs “see”, sometimes the HFT will see an order at $10.13, and step up the price to $10.18 so the bids follow higher and the bid price gets reset from $10.10 to $10.13 almost immediately. Or, if the bid price does not follow higher, then the bid-ask spread becomes grotesquely distorted from $0.03 to $0.08 for no other reason than HFT programs are blocking liquidity. Should the human trader withdraw his order to buy at $10.13, then often the bid-ask spread almost immediately returns to $0.03 and the ask will subsequently fall from $10.18 back to $10.13. Should he place the order again seconds later, however, the bid-ask spread will often immediately increase again with the bid price increasing to a point higher than $10.13 again.



The HFT programs execute the shame shenanigans in the options markets depending on what side of the market they are manipulating. I have many times been forced to take a lower profit on options trades because of HFT programs. For example, if I placed an order to sell on option contracts at $2.50 when the bid is at $2.50 and the ask is $2.60, instead of my order filling, the bid often immediately falls to $2.40 and the ask becomes $2.50, blocking my order from filling. HFT programs run amok in options markets as well. This is Skynet from Terminator rigging markets, destroying liquidity and unfairly rigging prices of all possible financial instruments that trade in every conceivable market, all with the blessings of the SEC.



Wall Street has been running these types of scams ever since advances in technology have enabled them to develop algorithmic programs to manipulate markets. In fact, on my company’s website, I have stated the following message for a long time now:



“Today, when stock markets rise in the face of horrid economic fundamentals, fundamental and technical analysis are inadequate when making critical decisions about your financial future…If one expects to be profitable in today's investment world, one MUST realize that ALL MARKETS ARE RIGGED, including gold, silver, currency and stock markets…Without understanding the fraud and rigging games of the financial oligarchs, it is impossible to accurately predict long-term trends. It is a near certainty that future shocks to the economic system will catch the vast majority of all investors unprepared and we expect great shocks to hit the global economy at some point in 2010.”



The only difference is that when I started pushing this message a decade ago, people laughed off my proclamations and accused me of being enamored with conspiracy theories. Today, more and more people finally are awakening to the reality that such a message is not a conspiracy but a fact.



So this is how the Wall Street Casino Scam operates.



The ratings agencies like Moodys and Standard and Poors are the pretty cocktail waitresses that lure the mark (the retail investor) into the Casino (stock markets) with free alcoholic drinks (abominably horrible and deceitful credit ratings of financial instruments) to instill the mark with the false sense of confidence necessary to induce gambling in the rigged Casino. The regulators like the CFTC and the SEC are the pit bosses that oversee the floormen (Wall Street firm CEOs) that oversee the table games dealers (the firm’s traders) and ensure the games (stock markets, currency markets, commodity markets) you are allowed to play possess a feature (HFT trading programs) that ensures that the odds will always enormously be in favor of the house. The pit boss oversees all floor dealers and conspire with the regulators (the cocktail waitresses) to give gamblers (the investor) a sense that all dealings are legitimate even though the odds of every table game (currency markets, commodity markets, stock markets) are insanely rigged in favor of the house (Wall Street firms). If we consider the table game of blackjack, in a real casino, should you receive a good hand, the dealer will pay out your bet. In the case of Wall Street, due to HFT programs, in many instances, should an investor receive a favorable hand (i.e., a favorable move in the stock market) in the game he or she is playing, HFT programs move in to prevent the bet from paying out in full or paying out at all (an investor’s sell order never executes at the price at which the market has informed the investor that he or she can cash out).

http://www.zerohedge.com/article/near-1000-point-slide-djia-compels-further-investigation-wall-street-casino-scam

[T Wolf]

1. All of these schemes need to be made illegal. And since those writing the laws will

never do this, the only way to attack the obscenity known as "finance" is to go after the individuals who commit these offenses (not a crime because they wrote the laws for themselves).

A few brokers and corporate execs hanging from light posts in lower Manhattan would be a good start. We could learn a thing or two from the Greeks.

[girl gone mad]

2. Personally, I'm rooting for Russian hackers.

Wall St. has a stranglehold on our government now. I think we are beyond screwed as a nation. What can stop the creeps at this point? They are like those tripods in War of the Worlds. No leader, no nation and no army will contain them. They'll simply continue their vicious feeding frenzy on the productive economy unless something destroys them from within.

[dotymed]

6. Russian Hackers

would give "them" just the reason (that they can sell to the public through MSM) to repeal "Net Neutrality."

[rhett o rick]

3. The stock market is a big racket. Those that play against this stacked deck are crazy. nm

[dotymed]

5. Not ALL.

The elitists with the "insider information" will always prosper at the cost of the little guy/girl. Most of the politicians know the "scoop" and have various means to take advantage of this. The profits may not be made in their names but they still get it. That is why our Congress and all of the heads of the branches of government are extremely wealthy. They do not represent the 80% of the population who own 3% of the wealth. There are (I hope) a few exceptions to this rule. There are the politicians who actually fight for real (not irrelevant for the sake of appearances) changes to this casino, disaster capitalism.
Capitalism has beyond a doubt (especially in the last 4 decades) proven itself to be the most corrupt and detrimental (for the majority), system on earth.
Capitalism was (is) supposed to be an economic system. It is now a political system. It globally (NAFTA, CAFTA..etc..) enslaves the vast majority, at the behest of the tiny minority of the ruling elite.
In America, during the 1970's, the wealthiest citizens and corporations paid a top income rate of 75%, this was in addition to steep "windfall profits" taxes. In 1939, that rate was 90%. Was America a "Socialist" nation then? I have never heard that it was. Those were the "good ol' days. Currently, our top tax rates for the wealthiest is 35% and most corporations pay no income taxes at all. Ironically, during those periods of high taxes for the wealthy, America had low unemployment and a thriving "middle class."
Of course, during those "good ol' days", Monopolies were illegal, the media was forced to give truthful information and allow differing viewpoints during the clearly labeled " opinion" portions of their newscasts. This was called the FAIRNESS DOCTRINE and President Reagan had it repealed. He said that our "news content should be determined by the Free Market."
All of the regulations that protected consumers from the greed of the free market, were repealed also. This was obviously a planned takeover by the tiny minority of the wealthiest. Now America barely has a manufacturing base (which provided most of our good paying jobs through Union representation "collective bargaining')
America also ranks with the third world nations in most economic and health categories.
Since we are now globalized, we have an opportunity to unite with the other citizens of the third world countries (who have a much larger manufacturing base than we do) who suffer from the same Feudalism and repression that we do. We immensely outnumber the elite ruling class who control our lives and force us to economically and fundamentally suffer from OUR lack of a voice at the table. We are supposed to be ruled by the majority with equal protections for the minority. We are ruled by a minority of the minority and there is no equal protection available for the majority. Hell, 1% of our population is in prison. That is about the same number of people who run our world.

[rhett o rick]

7. I agree with what you said. My point is that for the little guy to make it big in the market

he/she has to out-guess the manipulators. Most, if not all, dont.

[Art_from_Ark]

8. Both of you make very valid points

Average investors who don't have inside information about the stock market are, more often than not, just babes in the woods.

[Beavker]

9. I question how much the market really has to do with businesses anymore

Seems that it seldom takes into account what U.S. Companies are actually doing anymore. There's more manipulation on speculation and lobby induced regulation (or de-regulation) and thus it takes on a whole new life disconnected from the daily workings (successes and failures) of the actual firms that make up these markets as well as the reality of the situation on Main Street.


If I invest in Company A because I think they have a good business model or product, and it does well, I will make money when they do. If they don't. I don't. Bottom line.

That almost just doesn't seem to really matter anymore.

[Statistical]

10. Why do you think AAPL tripled in the same time PALM almost went bankrupt?

Maybe it does have more to do with fundamentals than you think.

Eventually everything comes back to the fundamentals. Stock can get pushed up, it can "get ahead of itself" but come earnings time it has to make the numbers or it will give it right back.

[fasttense]

4. Something is just not right with the system.

This should be a warning to all investors.