Another “flash crash” in NY today. This time it involved the “SPY” ETF, which is a proxy for the SP500, and is the most widely traded security on the NYSE. Minutes after today’s 4pm close, SPY dropped 10% in less than 15 minutes (so called “market on close” orders were triggered). The NYSE stepped in and cancelled all trades. How can anyone ask for any more proof that Wall Street, as currently set up, is rigged?
Used to be, that the Market was there to financially support good ideas.. Now its “Chicken Little” who controls the market. Fraidy cat investors destroy many,many companies and lives,
The longer it goes without some sort of meaningful reform in the markets – the longer it will be before confidence in the markets returns.
You can put lipstick on a pig, but it’s still a pig.
They should call the septic tank people to drain the cesspool.
The mud the pigs are wallowing in needs changing.
Prosit!
Hans-Christian Georg Rupprecht, Commander in Chief
1st Saint Nicolaas Army
Army Group “True North”
What caused all these “market on close” orders to be filed in the first place?
Now that these trades were canceled what’s to stop the same thing happening again on an even larger scale once trading starts up tomorrow?
Were these automated actions or conscious decisions of the traders?
Unfortunatly I know very little about the stock market so forgive me if these are stupid questions. 😉
Perhaps a return to open cry pits is in order.
Muslim Dances on Catholic Holy Altar, No Death or Rioting Ensues.
http://tinyurl.com/32bnvul
sorry, that was meant for reader’s tips.
I should go to bed now.
@ ChrisinMB:
What material change in the entire S&P 500 happened in the last 15 seconds of the trading day, to discount 10% of the US economy whose annual GDP is roughly 14 trillion dollars.
IE realistically how did the US economy, which the S&P 500 is a proxy, lose 1.4 trillion in earnings in 15 seconds to closing?
Doesn’t pass the smell test, time to change the pigs mud bath.
Prosit!
Hans-Christian Georg Rupprecht, Commander in Chief
1st Saint Nicolaas Army
Army Group “True North”
America is Bankrupt. No matter what is done in the markets you still owe the money recklessly spent by Soros & his White House boy Obama.
Its all become a ponzi scam with the markers being called in.
JMO
Hans:
The changes took place over 15 minutes, not 15 seconds.
Chris:
“Market on close” orders have been around for decades. These orders are set to be filled at the market price at the end of the trading day (4 pm), during the so-called “settlement period” from 4 to 4:15. If there are more sell orders for a stock than buy orders, there might be a slight drop in price, or vice versa, but generally prices were stable, and any small imbalances were handled by a group called “floor specialists”. The specialists were traders tasked with keeping a book for a particular stock (or number of stocks). This book listed outstanding orders or buys to be filled at particular prices. If there was no bid for a stock at some price (say, $50) in the open market, the specialist (“spec”) would consult his book, and find an open bid at say, $49.50, and fill the order. If for any reason, there was no open bid at any price, the spec’s job was to “make the market” – he would step in and buy the stock. Similarly, if a stock was going through the roof, the spec’s job was to supply stock to again make a market. (The more astute may have realized that this automatically made the spec buy low and sell high, which is why being a market maker was a highly prized position.)
In 2008, the NYSE got rid of specs, replacing them with “designated market makers” (DMM’s). The DMM supposedly had much the same responsibilities but would no longer get an advance look at trades. However, they would be guaranteed a certain percentage of the total order flow. But that only applied to the visible order flow. The growth of “dark pools” – orders which are bid and/or filled off the listed exchanges – has reduced DMM activity as a percentage of all activity. What this means is the quoted price of a stock may not in fact (and nowadays, usually DOES not) reflect all the outstanding bids and asks for a stock.
Now it gets highly technical, so here’s the Coles Notes:
Some high frequency trading computers will enter and cancel bids dozens of times a second probing for this “dark liquidity”. There’s just no way a human could keep up. When the HFT algos find it, that triggers an avalanche of buy/sell orders from a whole bunch of HFT systems, each trying to scalp the other for a penny or two. But if all the algos are on one side (buying or selling), then the price of a stock gets pushed up or down in a matter of moments. This is now becoming a monthly occurrence, and many believe, on its way to becoming a weekly, if not daily, event.
As I’ve said many times, why anyone would trade on US markets these days is beyond me.
After-hours trading. It’s very marginal. The financial system is not going to collapse because of that and no sweeping overhaul is needed either. Don’t jump on your ‘buy gold’ button too fast, you chicken littles.
I fired my investment person long ago, then had to wait and work at if for about three years to get my money out of the market and never to return.
The market is a casino. It is for professional manipulators and professional gamblers. The average person has no chance to gain anything in the markets anymore.
I suggest, gold, silver and real estate. Oh, and if you are allowed … a shot gun or rifle might be a good investment too. If you are not allowed it is still an investment worth making … stock up on food too … at some point the trucks will stop running for awhile and we will run out of food. As the unions realized that they are NOT GONG TO GET THE JELLY DONUT THEY WERE PROMISED … THEY WILL GET ANGRY AND STOP STUFF FROM MOVING.
I could go on, but I think most people here get it and know what the Leftists have let loose in the world and that we will need to survive it until we can change it back to something more real and reliable.
Hey Alan, I have a new post up, just for you.
https://www.smalldeadanimals.com/archives/015143.html
“What material change in the entire S&P 500 happened in the last 15 seconds of the trading day, to discount 10%”
That’s what I was trying to understand. From what KevinB said I’m gathering it was a function of the system’s procedural shortcomings and not due to any “real” material values or pessimistic traders?
as McCoy would say, “Damn it I’m an engineer not an trader!”
Still – underlying value won’t be permanently compromised by things like flash trading: If a utility is paying 5%, it is paying 5%, and will always will have a value proportionate to the dividend it delivers to its owner.
The current volatility is particularly frustrating to market timers, but that is a particluarly dangerous way to risk one’s capital, anyway.