Sell in May and go away?”  In this particular year, modern-day feng-shui advisers would definitely agree with the old-money WASPs who coined this 19th or 20th century Wall Street investment adage.

“The Snake is a powerful fire element: snake fire could bring social unrest, revolution, bombs, bullets, explosions. The Snake will combine with the Tiger and the Monkey to create a strong fire configuration of “Fire Penalty.”  The most dangerous months are the months of Tiger [February] and Monkey [August].”

“Monkey is in penalty with the Snake during year of the Snake.  If you are speculating in the stock market be very careful in May [Snake month], August [Monkey month] and November [Pig month] 2013. From 7th August to 7th September [the Monkey month] in the year of Snake is a full penalty month. Think twice before taking action.”

hand puppet casts shadow of Snake on Big Board

hand puppet casts shadow of Snake on Big Board

So even in the absence of any other economic indicators, Snake Year August would be a risky time to have investments in China.  And don’t blame the Pleiades, either:

Chinese stock prices swung wildly Friday after a brief trading frenzy blamed on a brokerage’s computer error.  Trading volume soared to 54 percent above Thursday’s level, with 1.5 billion shares changing hands. The main market index spiked up 6.5 percent before falling to end the day down 0.6 percent.  Everbright Securities Ltd., China’s fifth-largest brokerage, said later it suffered an unspecified problem with a computerized trading system, sending 7 billion incorrect purchase orders for shares.

In late morning trading, the benchmark Shanghai Composite Index spiked by around 100 points, or 5 percent, within two minutes, with turnover totaling 7.8 billion yuan ( 1.27 billion U.S. dollars). Bank and oil shares, including the Industrial and Commercial Bank of China and PetroChina, rose near the daily limit of 10 percent. In a statement sent to the Shanghai Stock Exchange, Everbright said that its investment strategy department encountered a problem in its arbitrage system while operating with its own funds during morning trading. Mei Jian, secretary of Everbright’s board of directors, said the company’s arbitrage system will not be used again until the company finds out how it failed.  “The company’s other systems are functioning normally, ” Mei said.


“We are probing the case and have seen some developments. But it will take more time to come to a correct and complete conclusion,” Mei said.

Offhand, Lunghu can think of two interesting possibilities:

  1. Everbright’s IT development team attempted to ‘cut some corners’ in building its arbitrage trading system.  Unfortunately, they used bits of code or algorithms ‘sourced’ from a Goldman Sachs or Merrill Lynch honeypot server.  Gotcha!  Fire Penalty.
  2. Perhaps certain red-blooded, patriotic, North American computer specialists from the Chesapeake Bay region (maybe even contract employees) decided to send a subtle message to any members of the CCP Central Committee who might happen to be the actual owner-operators of Everbright Securities Co. Ltd.  There’s always a way in, and usually a way back out.  Has anybody really forgotten what happened to U.S. markets in the Snake month of a recent Tiger year? Or last year’s August adventure at Knight Capital Group?

Until the next Ed Snowden steps forward, we Americans won’t ever know whether either of these scenarios actually occurred. But the Chinese will. Now, is that fair?


Update 18 Aug 2013:

The China Securities Regulatory Commission said Sunday that its investigators concluded Friday’s buying frenzy [resulted from] design flaws in Everbright’s computer systems that should have limited orders and prices.

So … looks like Option One is still a good bet, and Option Two can’t be completely ruled out: it might constitute a subset of Option One.  (Part of the ‘trusted partner’ program, you know?)




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