THERE’S SOMETHING SERIOUSLY WRONG WITH KNIGHT CAPITAL GROUP


UPDATE:::: 11h 00m HST:::: Some of the stocks being affected above their daily volume in the first 90 minutes: Rite Aid [RAD], Exelon [EXC], GM [GM], Armour Residential REIT [ARR], Lithia Motors [LAD], Nokia [NOK], China Cord Blood [CO].
I generally start my mid morning with a second cup of tea and a check of the NYSE heatmap one half hour after the open of the market. Immediately I saw something was wrong as I set my heatmap to show volume. I was attracted to Knight Capital Group [KCG] and their nearly 10% drop in value on nearly three times the daily average volume. Bloomberg is reporting that KCG spokeswoman says they are looking into an algorithm based explanation for their precipitous drop in value. there are other odd signs such as a few dozen stocks trading abnormally higher in the NYSE as well. There is a whisper that KCG made a large number of buy orders vice bid orders that hit the market seconds after the open and the system may have “choked” on the algorithm.

One stock to watch that is volume trending like KCG is Molycorp [MCP] which is down 2.75% on volume nearly double the daily average in one hour’s trading. More to come on this as the market finds its footing.

Qu’ul cuda praedex nihil!

Carlton Pryor, D.S.V.E., O.Q.H.[Econ.].
Lead Economist
TED-OG
84 Shatter 2 AS

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