Don’t be surprised when it blows up. By Elfintdesign.

After the brutal fall in early August, majority of Indices bounce up some. Don’t get fooled by this, as the leader, the DAX, is showing us the way once again. The DAX is the big underperformer, and leads us lower in today’s trading. The bounce in DAX which lasted for some days, will eventually evolve into another break of the lows. Below DAX and Stoxx charts. Note how the STOXX is approaching those must buy lows of 2009. What if we retest those lows yet again, and people realize the fallacy of long term investing. Even the “best” investor, who caught the rock bottom in 2009, is up “only” 25% if you invested in the STOXX. We won’t mention the other ones, that didn’t time the bottom….Worth the risk? For the US Index reversal put in yesterday, check the link.

for pattern lovers….

Ft.com
The Financial Industry Regulatory Authority (Finra) has asked some high-frequency trading firms to supply details of their strategies and their trading algorithms, reports Reuters. Tom Gira, executive vice president of FINRA’s market regulation unit told the news agency that there is something worrying him about the industry. ”It’s not a fishing expedition or educational exercisehttp://ftalphaville.ft.com/thecut/2011/09/02/667436/us-regulators-order-hft-codes-to-be-handed-over/

Italy’s squabbling centre-right government has cobbled together a compromise austerity package that relies heavily on a renewed crackdown on tax evasion to reach the goal demanded by the European Central Bank of a balanced budget by 2013, http://ftalphaville.ft.com/thecut/2011/09/02/667426/italy-finds-austerity-compromise-berlusconi-in-more-trouble/

Muammer Gaddafi vowed to stage a “long fight” for control of Libya that would see it “engulfed in flames” as world leaders in Paris backed a new administration for the country, reports the FT. His message came as some 60 nations and international organisations gathered at a summit in Paris and recognised the right of the national transitional council, http://ftalphaville.ft.com/thecut/2011/09/02/667406/gaddafi-vows-defiance-as-scramble-for-oil-heats-up/

The National Hurricane Center has alerted Gulf of Mexico interests that a low-pressure system in the area will probably strengthen into a storm within two days, Bloomberg reports. The warning has prompted some oil and gas output to be shut in. http://ftalphaville.ft.com/thecut/2011/09/01/667376/gulf-oil-platform-workers-evacuate-as-storm-brews/

Russian Railways halted grain deliveries to the Black Sea port of Novorossiysk this week, obstructing Russia’s return to global wheat markets after it ended an export ban, the FT reports. The railway said a “massive” backlog of grain wagons was clogging lines linking farmland to the port. http://ftalphaville.ft.com/thecut/2011/09/01/667346/russia-halts-grain-deliveries-due-to-backlog/

China could move closer to letting its currency float more freely if it was easier for the renminbi to join the mechanism that underpins the International Monetary Fund’s own reserve currency, Berlin said on Thursday. http://ftalphaville.ft.com/thecut/2011/09/01/667326/germany-backs-calls-to-widen-imf-currency-basket/

The global manufacturing recovery appeared to have come to a grinding halt in August, activity surveys suggested on Thursday, undermining hopes of a vigorous economic recovery in the second half of the year, http://ftalphaville.ft.com/thecut/2011/09/01/667296/global-recovery-veers-off-course/

Continue reading →

After several years some of the regulators are slowly starting to understand the business of HFT. This is a blow to the HFT Industry, and could spark a witch hunt on HFT. We will monitor these developments regularly. For those new to the concept of HFT, please consider the effects of the below behavior.

Overloading the US Options Market.

Reuters reports on the just started hunt on HFT;

Securities regulators have taken the unprecedented step of asking high-frequency trading firms to hand over the details of their trading strategies, and in some cases, their secret computer codes.

The requests for proprietary code and algorithm parameters by the Financial Industry Regulatory Authority (FINRA), a Wall Street brokerage regulator, are part of investigations into suspicious market activity, said Tom Gira, executive vice president of FINRA’s market regulation unit.

“It’s not a fishing expedition or educational exercise. It’s because there’s something that’s troubling us in the marketplace,” he said in an interview.

The Securities and Exchange Commission, meanwhile, has also begun making requests for proprietary algorithmic trading data as part of its authority to examine financial firms for compliance with U.S. regulations, according to agency officials and outside lawyers.

The requests by SEC examiners are not necessarily related to any suspicions of specific wrong-doing, although the decision to ask for it can be triggered by a tip, complaint or referral.

Full reading, click here.