Nanex Research

Nanex ~ 15-Jan-2014 ~'s $1.3 Billion Rise and Fall

Shortly after market open (9:31:22) on January 15, 2014, the stock of, Inc (symbol: CRM, market cap $35 Billion, give or take a billion) rocketed from 57.63 to 59.71 (almost 4%) in about 3/4 of a second.. There were 10 exchanges loaded with hungry high frequency traders (HFT) and an unknown number of dark pools: all providing liquidity, to the tune of approximately 100,000 shares and 400 trades.

Within 2 seconds, the price collapsed and the stock traded down to 57.47 which was below where it start just a few seconds earlier. This wasn't the result of a glitch, or fat finger, or one of the myriad of other excuses offered by proponents of high frequency trading (HFT). To HFT, this event was picture perfect.  

For anyone to claim this behavior is anything but alarming, they would either have to be ignorant, or lying, or both. The reason why these events continue to happen, is because high frequency trading (HFT) crowds out other market participants (those unwilling to spend $100K a month on networking and data fees) which prevents others from taking advantage of these extreme pricing dislocations. By the time most people saw what had happened, it was already over. For those with stop orders or trading systems that key off of market prices, events like these are a nightmare. How did we let our stock market deteriorate to this level?

1. CRM Trades color coded by reporting exchange from 9:24 to 9:41 Eastern Time.

2. CRM Trades color coded by reporting exchange. Zooming into about 1/2 minute of time.

3. CRM Trades color coded by reporting exchange. Zooming into about 5 seconds of time.

4. CRM National Best Bids and Asks (NBBO) color coded by reporting exchange.
The NBBO tracked the price all the way up, and all the way back down. In a nice tight range.

Nanex Research