Back in the summer of 2010, when the porn addicts from the SEC were still trying to pin the flash crash on a lazy mutual fund out of Overland Park, Kansas, we presented a little known firm called Nanex to the world, initially for selfish reasons – to use ther empirical analysis, now undisputed except by the most entrenched HFT firms, that the May 2010 flash crash was caused by runaway algos, just as we predicted would happen in April of 2009. Yet subsequently due to their artistic flair and unprecedented originality in presenting boring forensic millisecond-level data as the work of art of a demented genius, and their ability to bring excitement to the chaotic nanosecond oscillations of a vacuum tube, Nanex became a mainstay on our pages, and their work was used extensively to portray the now daily mini-flash crashes, and ever more frequent macro ones.
Since then Nanex’ work has been presented in virtually every mainstream media outlet: an outcome by which we are delighted as it means the understanding of just how broken the market is has spread far and wide, and today (belatedly) even made the front page of the Huffington Post. And the financial comedy channel still wonders why the retail investor doesn’t want to trade – hint: it’s not because they need more momentum, or even because they are not that dumb to jump on on a manipulated market at its all time idiotic highs – it is because everyone now understand the casino is hopelessly broken, even Joe Sixpack. Nanex is among the very few out there who are to thank for this outcome, the result of which is that Primary Dealers, prop desks and hedge funds are the only ones engaging in a game of hot potato, which gets hotter with every hundred billion in hollow liquidity injected by central banks, until the moment the potato explodes and takes out those very few still in the game.
The truth is that most of our frequent readers are very familiar with the work of Nanex, and of Eric Hunsader and his crew. It is not for them, but for everyone else who is still not been familiar with what the Wired business conference defined as “flash trading detective work” that we present the following 14 minute clip exposing the philosophy of the forensic consolidated tape detectives. But more importantly, Eric explains how his firm took otherwise boring terabytes of trading data and made it into a fascinating and informative explosion of animation, color and sound, all of which proves one thing: the equity markets have been hijacked from the humans, and are now dominated and controlled by the robots who provide a tsunami of liquidity when it is not needed, and dry up like the Gobi desert just as the market is imploding, as we all witnessed most recently during the AP hack-induced Hash Crash.