Thursday, May 26, 2011

Terrible Timmy's Time Machine



3:09 am (Hawaii) Maybe it's too early in the morning, I've got too many cobwebs in the head and the crash of an automobile waking me up for good did no favors. But maybe this who flash crash (the latest one anyway) was engineered by an overburdened Treasury head who unknowingly walked into a parallel universe and found himself years younger. Maybe he was 8 years old and had all the power in the world there. Maybe his first act was to run to the nearest (and conveniently empty) algo hedge fund office, type in some secret code mumbo-jumbo that bought up a whole lotta naked shorts on Spot Silver, sending the price over a cliff.

Maybe. But soon enough, the young boy's time travel adventure ended and all he had done gradually dissipated. That would explain how AGQ sold off to 188.25 this morning in peon premarket trading. AGQ is now back to 197 or so, still off yesterday's close of 200.18. But Spot Silver has bounced off the early low (below 36) and is at 37.14. Sleeping through the first hour of premarket was a good thing in this scenario.

I'd have a hard time believing any theory other than one involving the puppet masters and their naked shorts (unbacked paper silver). Was it really Asia that took the price down from 38.75 to 36.75 in a 3-hour span? If Asia generally is going to sell off any topping action, why here? A lot of buyers got their positions when Spot was above 45. I don't believe they'd settle for 38 or 37 en masse like this.


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