Dow biggest ever intraday point drop

[Crypto Crude]

Im going back to bed....
:(
.^sc

[evilroyrule]

i went back to bed and dreamt it was a computer glitch wrongly showing a 300 point drop and that triggered all the stop lossess to the 600 extension and it was an artificial cliff drop.

[evilroyrule]

hi belg. yes a friend told me that and i was sceptical so hid it in my dream ala twin peaks. i thojught after 87 they put in place measures to prevent such a drop???? again, what news was this a reaction to?? job date, economy generally doing ok. i know we got the undercurrent of printed money, us bankruptcty and other theories, but hard to pin point what this was a reaction to. although of course there doesnt need to be a reason. market is what market does. well be ok fellas.

[Arbitrage]

Corrections are good, just painful. Sort of like going to the dentist, which Shrewd showed is better dealt with by being asleep.

[CJ]

i thought after 87 they put in place measures to prevent such a drop???? I thought it the whole market shut down for an hour (?) if there was a drop of over 500.

P&G dropped 33% and accenture :

http://s.wsj.net/public/resources/images/OB-IK404_ACN_F_20100506160128.jpg

yep that is $40 to 1c to $40.

[evilroyrule]

i tried to get me some apple shares but missed. will try on open so i will be up also

[ENP]

Okay! .... Now what to do? :eek2:

We've had three days of nice big falls and today's was exacerbated by a monumental cock-up. .... Methinks we're due for a bit of a sanity rally to'morrow. Probably well worth waiting up for :D

It's gonna be a good nite .... It's gonna be a good, good, good, nite :)

Why do you stay up late for? The NZX and ASX don't open until at least 10am

[soulman]

Why do you stay up late for? The NZX and ASX don't open until at least 10am

They are talking about the Americana market 2night.

For our market, it would be next Monday.

[peat]

I'm not buying the 'glitch' theory. To me the market has been turning for a few days and this was a representation of the harboured nervousness and fear lingering in the market since the GFC after a long and extended rally where there is a general consensus its run too hard. The upside had to be brought back to the mean and of course last nights downside is now back to mean as well.
Even if someone did type in 15bill instead of 15 mill with a sell order on Proctor and Gamble its hard for me to understand (yes I know about market relationships) that this have such an impact on currency bond and other equities. Yes there are lot of programmes and algorithms making trade decisions so its possible I guess but theres a lot of people - real warm-blooded people - pulling triggers out there in the markets too so to completely write this off as some sort of aberation - as a glitch in the matrix - is in my opinion naive. This was the market showing a turning point in greed vs fear

[shasta]

I'm not buying the 'glitch' theory. To me the market has been turning for a few days and this was a representation of the harboured nervousness and fear lingering in the market since the GFC after a long and extended rally where there is a general consensus its run too hard. The upside had to be brought back to the mean and of course last nights downside is now back to mean as well.
Even if someone did type in 15bill instead of 15 mill with a sell order on Proctor and Gamble its hard for me to understand (yes I know about market relationships) that this have such an impact on currency bond and other equities. Yes there are lot of programmes and algorithms making trade decisions so its possible I guess but theres a lot of people - real warm-blooded people - pulling triggers out there in the markets too so to completely write this off as some sort of aberation - as a glitch in the matrix - is in my opinion naive. This was the market showing a turning point in greed vs fear

Peat, i thought orders in the market for +/- 25% over or below market price were purged?

Am waiting to read all about what really happened & who sparked it all!

[soulman]

Basically, I am not suprise with anything now. The US and EU market will do what it will do tonight. Coin toss, either way, big or small or even FLAT.

[ENP]

What time in New Zealand does the NASDAQ in the USA open?

(the NASDAQ is the equivalent of the NZX, yes, no?)

[trackers]

What time in New Zealand does the NASDAQ in the USA open?

(the NASDAQ is the equivalent of the NZX, yes, no?)

Closes at 8am...so, midnight I think

[peat]

NASDAQ is the technology index.

[Ish]

What time in New Zealand does the NASDAQ in the USA open?

(the NASDAQ is the equivalent of the NZX, yes, no?)

S&P 500 is more like the nzx 50, although i prefer to look at the nyse, dow and nasdaq to get a more comprehensive look

[bull....]

What a rout

[peat]

So there was a another spike down this evening, supporting the notion that this action is sentiment (and not admininistrave ) based, as shown here in the hourly candles of the S+P500. It is similar to yesterdays but not as violent.
According to candle theory only the first one was a true hammer as its lower wick was more than twice the length of its body. Its low point becomes a support now and a logical area to cover for longs.

[peat]

Elliot Wave have this to say about the technical glitch

Some media pundits are trying to blame the current decline on some type of "trading error." But we were following yesterday's slide minute-by-minute and there was nothing disorderly about the selloff. All the waves were in place indicating a "normal" phase of selling. Today we learned from The Wall Street Journal (online) that "exchange operators maintain that their systems and customers experienced no technical glitches that might have prompted the selloff." The Journal further states in their article that regulators are searching for something, "after exchanges reviewed their audit trials and so far have found nothing indicating a massive, erroneous trade that touched off the chaos." In other words, investors and market followers cannot believe that the stock market can fall for "no reason."

[mattyroo]

Good day on the ASX for trading yesterday, not so good for the portfolio... Portfolio was down about 5k yesterday.... ouch.

I bought 200k NDO at 12.5 soon after open and flicked them well before the close for 13.5 and bought 100k BUL for 17 and got rid of them for 18. Couple of nice litle trades like that make the day all that much better. Keeping my eye out for more opportunities like this over the next little while. NGE would've been another easy scalp yesterday, but I didn't notice it until it had rallied.

[ynot]

I'm with you on this one Peat. It stagers me to think whoever makes these statements believes the masses will buy this explaination. All i can say is hang on to your hats. This is not over yet.

[Dr_Who]

I think this is yet another great opportunity to make alot of money for those that have cash sitting on the sideline.

[Corporate]

I think this is yet another great opportunity to make alot of money for those that have cash sitting on the sideline.

Definitely. I think a second chance is coming!

Tempted to head to the bank next week and arrange come margin.

[voltage]

okay if this is a great opportunity lets have a couple of recommended blue chip stocks to load up on.
I would have apple at the top of the list. Also snoopys recommended Yums

[axion]

What time in New Zealand does the NASDAQ in the USA open?

(the NASDAQ is the equivalent of the NZX, yes, no?)

It opens in the early hours of the morning (I can't remember a precise time maybe like 3am-ish or something (?)).

NASDAQ is one of many indexes (just like NZX50 is an index). It's for technology stocks. Other indexes you might know of are the Dow Jones and S&P500.

[peat]

Nasdaq shares are tradeable from midnite till 8 am NZtime. normal US equities from 01:30

[macduffy]

It opens in the early hours of the morning (I can't remember a precise time maybe like 3am-ish or something (?)).

NASDAQ is one of many indexes (just like NZX50 is an index). It's for technology stocks. Other indexes you might know of are the Dow Jones and S&P500.

Just adding to info re the NASDAQ.

The index is, as mentioned, widely followed as an indicator of technology stocks. But the NASDAQ itself is, in fact the biggest stock exchange in the US. It was developed as the first electronic exchange and had its origins as a vehicle to trade stocks that didn't qualify for listing on the NYSE.

[Dr_Who]

okay if this is a great opportunity lets have a couple of recommended blue chip stocks to load up on.
I would have apple at the top of the list. Also snoopys recommended Yums

I too like Apple. If the Apple sp comes down more, I may pick up some more stock. The new Ipad may replace the laptop.

[Dr_Who]

... LOL. What timeframe are we talking here?

Abit like the mobile phone, it will take a period of time, but Apple will take a good size market share in the laptop market like it is now doing in the mobile market. Iphone is a mini computer/phone you can carry around. It does tie you down to one place. Iphone is simple an amazing device for those that have one and cant live without it.

Anyway, back to topic. The market will be up over night on EU bailout proposal... finally. Why are the Europeans so slow at doing anything?

[trackers]

Abit like the mobile phone, it will take a period of time, but Apple will take a good size market share in the laptop market like it is now doing in the mobile market. Iphone is a mini computer/phone you can carry around. It does tie you down to one place. Iphone is simple an amazing device for those that have one and cant live without it.

Anyway, back to topic. The market will be up over night on EU bailout proposal... finally. Why are the Europeans so slow at doing anything?

The Ipad won't be replacing anything until it starts multi-tasking!! The current model out can't even connect to the internet on its own steam...

[Dr_Who]

Hold on tight guys. Here comes the big bounce.

V for volatile.

[Voltaire]

The Ipad won't be replacing anything until it starts multi-tasking!! The current model out can't even connect to the internet on its own steam...

The evidence seems to indicate otherwise...

http://tech.fortune.cnn.com/2010/05/06/how-the-ipad-gobbles-up-netbook-sales/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+fortuneapple20+%28FORTUNE%3A+ Apple+2.0%29

[Oiler]

The Ipad won't be replacing anything until it starts multi-tasking!! The current model out can't even connect to the internet on its own steam...

I agree Trackers. Me as always on the "bleeding edge" of technology ordered one out of the States because I had to have one, have now sold it :t_down:

[trackers]

The evidence seems to indicate otherwise...

http://tech.fortune.cnn.com/2010/05/06/how-the-ipad-gobbles-up-netbook-sales/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+fortuneapple20+%28FORTUNE%3A+ Apple+2.0%29

The argument was whether the iPad will take over laptop (notebook) sales, so quoting me an article called 'how the ipad gobbles up netbook sales' isn't that compelling... It may yet be a game changer, but not before it improves a lot.. At the moment its just a novelty that serial first adopters will buy, regardless of its real quality IMO

[Voltaire]

The argument was whether the iPad will take over laptop (notebook) sales, so quoting me an article called 'how the ipad gobbles up netbook sales' isn't that compelling... It may yet be a game changer, but not before it improves a lot.. At the moment its just a novelty that serial first adopters will buy, regardless of its real quality IMO

Actually, I agree with you in that I personally don't see the appeal of the iPad as a laptop replacement but I quoted you as saying that the iPad won't be replacing "anything" and that claim, on the evidence, is clearly false. Given Apple's track-record, bold pronouncements about a new product being nothing more than a "novelty" stand a very high risk of being trampled into dust (the road to Cupertino is littered with them).

[trackers]

Hold on tight guys. Here comes the big bounce.

V for volatile.

Europe STOXX index up almost 6%!~ DOW futures up 300 points, geez... Hope everyone took up nice positions today

[axion]

Is there consensus on what happened on Friday yet?

[Dr_Who]

Europe STOXX index up almost 6%!~ DOW futures up 300 points, geez... Hope everyone took up nice positions today

I did indeed.

Bought some shares last Fri and today. :)

[remy]

^nice work, i brought up on friday morning one hour after the market opened into some big caps, should of done the same today... up 4.25% on average so happy enough.. time to make back all the cash i lost on NWE and URA after the crash..

[Dr_Who]

KABOOM!

Dow up over 3% parts of Euro market up over 9%!!

[Crypto Crude]

Man I hate that word...
two weeks ago the word was seldom used... Now every man and his dog wants to pull it out...


todays new word

Boom Logistics...
what are we going to manufacture up today huh...
yeah boi
:cool:
.^sc

[STRAT]

Perhaps Im a natural born cynic or maybe Im just getting old but these spikes seem more manufactured than ever.:eek2:

Guess we can start talkin Markets a gain.

Hey Shrewdy, talkin about hated popular lingo perhaps I should have said

Im like a natural like born cynic or like maybe Im like getting old. OMG, like these spikes seem like more manufactured than like ever.:lol:

[remy]

In for a big day thats for sure, well done to everyone that brought up yesterday

[Dr_Who]

Perhaps Im a natural born cynic or maybe Im just getting old but these spikes seem more manufactured than ever.:eek2:



I think it is s combination of short covering and insto that are underweight climbing back on board. Who knows what those big boys are doing. Just ride the coat tail and enjoy the party while it lasts.

[trackers]

Im like a natural like born cynic or like maybe Im like getting old. OMG, like these spikes seem like more manufactured than like ever.:lol:

At first I was like :mellow: then I was like :p now I'm like :eek2:

[upside_umop]

Oiler the trader! Probably a good call....

OS4 is coming out for the iPhone and iPad (US summer/end of this month?)...so it will be able to multitask then. Best to wait for the 2nd gen, as apple always seem to refine them a bit more then.

Off topic, just thought I'd clear it up...me being a bit of an apple lover and all.

[peat]

Regulators now believe the disruption was caused by a toxic, not-yet-understood, feedback loop created when multiple trading schemes interacted, according to people familiar with the situation.
That contradicts earlier speculation that the trigger was a small number of erroneous trades.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10644167


not just 'contagion' but 'toxic' has really become popular these last few years too

It now seems that when the NYSE put in its own circuit breakers, the lack of liquidity forced the other markets to extremes , so they see the solution to have common circuit breakers across all the disconnected exchanges.... sounds more plausible

[STRAT]

Regulators now believe the disruption was caused by a toxic, not-yet-understood, feedback loop created when multiple trading schemes interacted, according to people familiar with the situation.
That contradicts earlier speculation that the trigger was a small number of erroneous trades.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10644167


not just 'contagion' but 'toxic' has really become popular these last few years too

It now seems that when the NYSE put in its own circuit breakers, the lack of liquidity forced the other markets to extremes , so they see the solution to have common circuit breakers across all the disconnected exchanges.... sounds more plausibleContinuing with a cynical theme. The more versions of explanation they come up with, the more likely none of em will be the truth I reckon Peat

[peat]

Craigs advise
In the wake of the stock market's May 6 chaos, more than

10,000 trades have been canceled, according to the Nasdaq
OMX Group. Exchanges including Nasdaq and NYSE
Euronext's New York Stock Exchange agreed to cancel "clearly
erroneous" trades after hundreds of stocks and exchangetraded
funds lost as much as 99 percent of their value and then
fully recovered in a 20-minute period on Thursday. Regulators
are still struggling to understand what caused the bizarre
trading. The Nasdaq "broke" 10,468 trades totaling 1.4 million
shares in 236 different securities, Executive Vice President Eric
Noll said on Tuesday in prepared testimony at a hearing of the
House Committee on Financial Services in Washington, D.C.
Noll did not give a dollar figure for the canceled trades. Only
trades that occurred between 2:40 p.m. and 3 p.m. EDT at
prices at least 60 percent above or below a security's price at
2:40 p.m. were canceled, prompting howls of protest from
some investors.

Be a bit of a bugger if you picked up some good buys and they cancelled the deals on you. Doesnt seem quite right to me... we're all adults here , if you let your bot trade on your behalf you should live with the consequences

[CJ]

Be a bit of a bugger if you picked up some good buys and they cancelled the deals on you. Doesnt seem quite right to me... we're all adults here , if you let your bot trade on your behalf you should live with the consequencesAgree but there would also have been some normal investors whose stop losses were triggered. Trying to determine which trades were to blame and which were innocent would a nightmare.

[moimoi]

Conversely those that bought at 59% below the ask at 2.40pm will be chuffed.

I smell cover up.!

5 days later and the powers that be are trying to suggest that the computers have no records of who made the trades. How about you look at who placed the original orders to sell down to the "go slow" level on the NYSE let alone what happened after that when orders were re routed.

The real reason is that there are major litigation issues and all involved will have legal advice to say nothing.

[peat]

This guy does economics in rhyme

http://ravenofferings.blogspot.com/


No glitch caused this rout, you can be sure of that
Or a trader in doubt, whose finger got fat
Supply and demand, that's all that you saw,
The bids and the ask and fear that was raw
It would have gone lower if it hadn't been for the Fed
Who stepped in to buy stocks from the friends in his bed.
That's why dear Ben doesn't want you to audit his bank,
You'd find all the stocks that he dredged out of the tank!

[peat]

one last post on this event, which is a significant one imo.

Van Tharp's email (Article by Barton) does a good summary of the causes and its ramifications - it can be viewed online here http://app.bronto.com/public/?q=preview_message&fn=Link&t=1&ssid=10920&id=6le641bnn1cnsh7lqqfpb6k82piai&id2=3dys5xzb5azc2xkijg24e5j42ezs6&subscriber_id=auwziecbqxzhrmxcktfmqqdbvhjjblh&messageversion_id=azentvgwkbzshfdzsmpqsehdeqekbej&delivery_id=bickpihesfihctvjyrovnnjgqjftblg

It was the biggest absolute intraday point move in the indexes (there have been larger moves on a percentage basis)

But if you regard it as a 10 sigma occurrence then you think of the markets as operating under normal (or Gaussian) distribution which is highly debateable.
extreme events happen more often than can be predicted or really expected.

He identifies a number of events happening in quick succession (see article)
He comments the markets are different now in that :
- the majority of trading for P&G, IBM and other household blue chip namesis now goes through the NASDAQ, BATS and other electronic exchanges.
- 30% of total stock trading volume is now done by high frequency trading firms.

Should we use close only stop losses?"
Should we quit using stop losses at all?
"How can I protect myself against big drops like this?"

His answer (for you CJ) is that proper position sizing remains the MAIN source of risk management for traders and investors.

[peat]

2607

a picture to summarise and conclude