Two themes that we've been consistently stressing over the past several years were beautifully illustrated today, courtesy of a hacked AP Twitter feed.
They are:
- Our markets are broken (courtesy of High Frequency Trading, or HFT, computers), and
- When things finally shift, they will do so at a speed that will shock us.
But first, the hacked AP Twitter feed:
A serious report of explosions at the White House that instantly rattled the markets was quickly revealed to be a hoax. Somehow AP was hacked.
While I am sure there's quite a bit of ink that we could spill around the idea that markets now trade off Twitter feeds and whether this is a good thing or a bad thing, the fact is that we live in a world where computers now sniff the news feeds for any tradable bit of news and then react with startling speed.
At the time of the hacked AP tweet, the S&P 500 was trading up close to 15 points, or 1%, on the day. Within seconds of the tweet, all of the U.S. stock indexes were plummeting, with nearly the entire day's gains lost in a single five-minute window on exceptionally high volume.
But the hack was quickly revealed and the damage entirely undone in the next five-minute window. No harm done, unless you had stops triggered during that event (which some undoubtedly did), and we can all just laugh about it, right?
Not so fast.
Looking into the trading data during the
by cmartenson 
