Friday's Failures: Busted Trades All Over

Wannabet on whether this close sticks?

NakedShorts’ favorite futures brokerage, MF Global (MF), traded much in line with the market Friday, with an early spurt slowly withering before straightening up around 3:30 pm. On the 3:59 tick, 38,000 shares traded between $6.32-$6.38, but the spike on the far right shows 445,800 shares (more than 10 per cent of the day’s volume) done at $8.75, at 4:05 pm. An impressive 37.8 percent surge in the closing cross. While hoping — always a reliable investment strategy — that the trade was the result of some so far unknowable someone knowing something that created an urgent need to climb aboard the train wreck, bidding the stock to its highest close in three months, the more likely explanations involve some muscular beast playing option games into the quad-witching close, or fat finger-inspired fireworks. Monday morning should be interesting.   

The chaotic market opening on Friday morning has produced an impressive crop of busted trades. This is the Nasdaq list; the New York Stock Exchange is understood to have been similarly afflicted — to a greater or lesser extent — but your intrepid reporter was unable to find the page where it publicly discloses such things. The oft-repeated phrase:

Pursuant to rule 11890(b), NASDAQ, on its own motion, will cancel all trades greater than 20% away from the prior day’s close executed today between 9:30 and 10:30 a.m. ET. This decision cannot be appealed. MarketWatch has coordinated this decision with other UTP Exchanges except CBSX, NYSE & AMEX. NASDAQ will be canceling trades on the participant’s behalf. This decision cannot be appealed...

All of which only partly assuages NakedShorts' <sarcasm> surprise </sarcasm> that good ol’ Fidelity blew up shortly after Friday’s open, delivering prices (more or less) but declining to provide account balances or accept orders for more than 30 minutes...and, of course, refusing to answer the phone (or, more precisely, putting callers on hold for 25 minutes (at which point, in my case, my phone battery died)).

By the time service was restored, the (long) inventory which I had wanted unload into the opening ramp had dropped by around 10 per cent, and the inverse short which I had wished to acquire was up by a nearly identical percentage.

In the unlikely event that Ted or Abby Wossname lurches by these pixels, you owe me $3000, more or less. So good luck to me.

The fun thing for market technicians will be sorting charts. An impressive number of stocks will be showing entirely fictional price and volume points, and it’s a pretty certain bet that data vendors will be investing a reasonable approximation of $0 in adjusting to reality. 

Disclosure: NakedShorts is long MF.