The reason for the big drop at 2:47 p.m. [Archive]

James48843

05-06-2010, 02:35 PM

Today's wild ride- led to an interesting P&F chart today. Notice that the entire row of "O"s filled in, and then STOPPED- exactly at the point where it was supposed to.

How about them apples? ? ?

9316

Now- the next question is "Is that it? Are we ready to go back higher again?"

My thoughts are no- we're not done. We reached WAaaayyy down for a minute, and then shot back up. But as the volume has only shown a fraction (see down near the bottom on the volume chart) we still have a lot more trading to do in the negative portion of this wave down.

I'm sitting on the sidelines- and I believe it will settle back down over the next few days towards the low end here, before deciding which way it wants to head.

I'm still seeing hard resistance at 1070 level. That proved a good area today- the low was
just below that at 1065 before the rubber-band kicked in and propelled it back up. But I think we'll drift lower back down around that range shortly.

That's just my guess. Still I will be looking for a nice place to jump back in at, around that 1070-1100 mark.

Wild ride, isn't it?

As always- that's only my guess at reading the tea leaves here. You do what your own heart and head tell you, not what I write. I'm just a guy- not a professional. Good luck out there. And be careful.

JTH

05-06-2010, 02:47 PM

Over 100 point range today on the SPX, no not the DOW, the SPX!!! That is just freakish :nuts:

tsptalk

05-06-2010, 03:19 PM

That is amazing - the fat finger order that took the Dow down 980 was supposed to happen. :)

Silverbird

05-06-2010, 03:31 PM

Ok, so what happened at 3:00 PM eastern today? That's a deep valley right there!

Edit: Found an article

NEW YORK (CNNMoney.com) -- In one of the most gut-wrenching hours in Wall Street history, the Dow plunged almost 1,000 points Thursday, before recovering some, as on a technical glitch in the trading of Procter & Gamble stock and fears about the European debt crisis spreading

http://money.cnn.com/2010/05/06/markets/markets_newyork/index.htm?hpt=T1&iref=BN1

fedgolfer

05-06-2010, 03:40 PM

That is amazing - the fat finger order that took the Dow down 980 was supposed to happen. :)

http://finance.yahoo.com/news/Trading-Error-at-Major-Firm-cnbc-434682061.html?x=0

what a silly excuse... the "B" isn't even adjacent to the "M"... if it was one fat finger, he meant to enter 9 Nillion shares. What was his name Tourre or Chubopolus?

350zCommTech

05-06-2010, 03:48 PM

http://finance.yahoo.com/news/Trading-Error-at-Major-Firm-cnbc-434682061.html?x=0

what a silly excuse... the "B" isn't even adjacent to the "M"... if it was one fat finger, he meant to enter 9 Nillion shares. What was his name Tourre or Chubopolus?

Maybe his keyboard has a faulty 0 key?

fedgolfer

05-06-2010, 03:52 PM

350zCommTech

05-06-2010, 03:59 PM

Zero key would make more sense. I've never worked in the floor, but all those tablets and keyboards, it doesn't appear those guys ever use the letters except for the ticker symbols. sounds like a load of baklava.

I agree. Something smells.

But if they follow the money, they will find out what really happened. But they won't try hard since they were the ones who did it, and they are now running off with the loot.:nuts:

James48843

05-06-2010, 04:00 PM

The trading firm that caused the drop?

Citigroup.

"TOO BIG".

When one guy, at one desk, can push one key, and cause a 1,000 point drop in the Dow,...

Can you say "Too big to fail?"

http://www.cnbc.com/id/36999239

Trading Error at Major Firm Blamed For Selloff

Published: Thursday, 6 May 2010 | 4:21 PM ET

By: CNBC.com with Reuters

A human trading error at a major firm was the root cause of Thursday's sudden, 9 percent selloff in U.S. stocks, sources told CNBC.

Multiple sources said a trader entered the letter "b"—as in "billion"—when he or she meant to type "m," for "million," shortly before 2:47 p.m. New York time.

U.S. stocks plunged suddenly (http://www.cnbc.com/id/36988229/), briefly by more than 9 percent, before pulling back to a near 3 percent drop, as investor worries mounted that Greece's debt problems could spread.
Sources also told CNBC that the firm in question is Citigroup (http://data.cnbc.com/quotes/c).

Citigroup said it has no evidence of a bad trade but it is investigating the situation.
The New York Stock Exchange reported there were no computer glitches in its systems Thursday.
Separately, Nasdaq said it was working with other major markets to review the market activity that occurred between 2:00 p.m. and 3:00 p.m.
© 2010 CNBC.com
Break them up into little pieces.

Tiny little pieces, please.

"B" or "M" on the keyboard shouldn't matter- whether it's a billion shares, or a million shares, if someone can push one button, and the stock market sees that Citigroup is selling a billion shares of anything, and thinks it's a real order- then Citigroup is simply TOO BIG to have placing orders.

Break them up. All the very large trading companies. Break them up into little pieces.

Now.

Minnow

05-06-2010, 04:03 PM

I'd settle for bringing the old Glass-Stegall back.

caveat: I don't buy the trading error for one second.

Buster

05-06-2010, 04:18 PM

According to Jim Cramer..the massive drop of almost a 1000 points was only for about 3 minutes and once the M and the B thing was straightened out, the market bounce back..

James48843

05-06-2010, 04:19 PM

trading error?

Somebody just made a gazillion dollars.

I don't know who- but somebody did.

Mark those words.

Gumby

05-06-2010, 04:20 PM

trading error?

Somebody just made a gazillion dollars.

I don't know who- but somebody did.

Mark those words.

Maybe the PPT needed some extra funds to continue????
Did they get enough?:D

Minnow

05-06-2010, 04:50 PM

[QUOTE=James48843;270454]Somebody just made a gazillion dollars.
QUOTE]

made

stole

is there really a difference in this market nowadays?

FAB1

05-06-2010, 05:05 PM

it never recovered to where it was before the "error".

I want mine back! grrr

350zCommTech

05-06-2010, 05:06 PM

What happens if the market drops 600 points tomorrow?

FAB1

05-06-2010, 05:07 PM

I noticed Bonds went way UP as the stocks went down and then sold off like instantly. Somebodys raked in some dough there too.

Well whats next? Friday will be an interesting day, real interesting.

FAB1

05-06-2010, 05:10 PM

What happens if the market drops 600 points tomorrow?

This sounds insensitive, sorry.

Let IT. I took my punishment today, but tomorrow I will be nearly out of the market. Bonds can go up tho. :D

350zCommTech

05-06-2010, 05:18 PM

This sounds insensitive, sorry.

Let IT. I took my punishment today, but tomorrow I will be nearly out of the market. Bonds can go up tho. :D

Sorry, didn't mean to sound like that. I was asking about what excuse they would use if that was to happen.

FAB1

05-06-2010, 05:59 PM

Im so used to posting on a mobile my English no good.

That should have been: If this sounds insensitve, sorry - meaning I am the insensitive one apologizing in advance...

Frixxxx

05-06-2010, 06:26 PM

Trading by typos......Can you imagine the people that got into P&G at 40?

This is a nightmare.

This trader will be an ECON 101 question in 10 years.:mad:

James48843

05-06-2010, 06:47 PM

USAA just posted this on their website:

Market Falls 3.25%; USAA Responds

Posted on May 06, 2010 |
The Greek financial crisis today was weighing on the U.S. stock market when an unusual market event triggered a wild ride for investors — with the S&P 500 Index closing down 3.25% for the day.
The NYSE and NASDAQ report they are investigating potentially erroneous transactions involving multiple securities executed between 2:40 p.m. and 3 p.m. EST. The NYSE and NASDAQ will update investors with details as soon as they are available. Check NASDAQ (http://www.nasdaqtrader.com/Trader.aspx?id=MarketSystemStatus) for updates.
Prior to 2:40 p.m., investors were principally concerned by the lack of concrete action by European Central Bankers to provide the liquidity necessary to stop the Greek debt crisis from spreading to other members of the European Union (e.g. Spain, Ireland, Portugal and Italy).
For more information about international markets, watch the USAA First Quarter Market Update (https://www.usaa.com/inet/ent_blogs/Blogs?action=blogpost&blogkey=newsroom&postkey=webinar_quarterly_market_update_20100414) webinar from April 14.
USAA's investment team is monitoring markets continuously, and we will keep you updated as appropriate.
USAA advises members to stick with their financial plans. If you do not have a financial plan, contact USAA (https://www.usaa.com/inet/ent_utils/McStaticPages?key=advice_planning_main&wa_ref=pub_global_advice_and_planning).

Investing in securities products involves risk, including possible loss of principal.
Foreign investing is subject to additional risks, such as currency fluctuations, market illiquidity, and political instability.

Interesting. Even somebody like USAA is talking about today.

Just an observation- but I think we're going to see some interesting market action tomorrow.

grandma

05-06-2010, 06:51 PM

Trading by typos......Can you imagine the people that got into P&G at 40?
This is a nightmare.
This trader will be an ECON 101 question in 10 years.:mad:
since it appears Wal Street allowed the tx to be cancelled, will that also cancel purchases?

Bullitt

05-06-2010, 07:07 PM

I'll tell ya. I'm just at a loss of words right now. You've got the buy and holders calling this a buying opportunity within a bull market and the bears calling this the end. Ha. A bull market that bids dry up on. Hmmm?

The reason for the drop was when investors pull bids, the NYSE just halts trading a few seconds until people get their heads together and buy. Problem is, we have all these stupid dark pools and electronic exchanges that just run like senseless bots and don't shut off because the companies that own them are probably front running trades via HFT programs. What bids were left? PG at (I heard) .15. Yeah, 15 cents, not a typo. Accenture at a penny. WTF?

So this is what happens in a bull market- bids dry up? :nuts: I've been saying for a few months now and recently I've looked in the mirror and wondered if I lost it, but this completely insane market is finally showing cracks to even the most unknowing investor on main street.

Keg stands, power hour and body shots, party hard all day and night; for, liquidity has drowned out the voice of reason.

Birchtree

05-06-2010, 07:25 PM

And now comes the 70 point SPX spike to the upside crushing everything in its way. This bottom is truly a gift to the courageous hoof hearted. Take it down another 100 Dow points in the morning and then bring it back like a rocket ship. No way would I be out of this market - there is way too much money to be made.

Buster

05-06-2010, 08:10 PM

No way would I be out of this market - there is way too much money to be made.
Like Jim said earlier..I too am wondering if the little slip of the B word was not a very well calculated mistake....:suspicious:

If someone was waiting for P&G to bottom out and then spike back in 4 minutes, one would have made a ton of cash.

Boghie

05-06-2010, 08:13 PM

Why were disparate exchanges hit instantaeously?

Birchtree

05-06-2010, 08:26 PM

All the trades from 1440 hours until 1500 hours will be expunged by the NYSE. No one will profit from an apparent mistake. Sure makes a nice roo tail though.

nasa1974

05-06-2010, 08:52 PM

I find it hard to believe that it was an error that caused the market to drop so hard. Someone influenced the market and it was no error. Just my opinion.

Buster

05-06-2010, 09:21 PM

All the trades from 1440 hours until 1500 hours will be expunged by the NYSE. No one will profit from an apparent mistake. Sure makes a nice roo tail though.

How do you know this?..Not saying you're making it up..but does this usually happen in a case like this?..otherwise the DOW should have broke even today at worst, based on what you're claiming will/did happen.

Boghie

05-06-2010, 09:34 PM

All the trades from 1440 hours until 1500 hours will be expunged by the NYSE. No one will profit from an apparent mistake. Sure makes a nice roo tail though.

Hope so, but Tom will have a heck of a problem with the AutoTraker - eh...

If they don't adjust I might just be

Lookin' up at the 'G Fund'!!!
this time tomorrow:nuts:

fabijo

05-06-2010, 11:15 PM

How do you know this?..Not saying you're making it up..but does this usually happen in a case like this?..otherwise the DOW should have broke even today at worst, based on what you're claiming will/did happen.

Here's an article:

Nasdaq to Cancel U.S. Trades That Moved More Than 60%

Nasdaq OMX Group Inc. said it will cancel trades of 286 securities that fell or rose more than 60 percent from their prices at 2:40 p.m. New York time, just before U.S. equities plummeted.

http://www.businessweek.com/news/2010-05-06/nasdaq-to-cancel-u-s-trades-that-moved-more-than-60-update2-.html

fabijo

05-06-2010, 11:16 PM

And another article saying that NYSE will do the same thing:

http://www.reuters.com/article/idUSN0614132620100506

Zebe

05-07-2010, 12:07 AM

I don't think this will settle down quickly. I think tomorrow we will still see a lot of volitality and that it will not settle until after the weekend and the news people talk about it endlessly. The average investor will still be running for the exit. I expect to see some administration or Fed types come out with comments and for Congress to take a look. All this will keep money out of the market. Don't think there will be a rebound with larger volume until at least next week. Do think that if there is large volume tomorrow that it will be to the down side considering today's trade and continuing worries about Europe. After today small investors are scared of loosing the rest of their retirement savings. Just my gut feeling.

James48843

05-07-2010, 05:28 AM

Cancel all the trades between 14:40 and 15:00 that moved 60% or more?

Incredible.

I have never, in my life, heard of such a thing.

Well, there ya go- that ought to bring confidence into the markets. (NOT).

I think yesterday must have had something to do with a phase of the moon, or something. Anybody notice whether or not there is a full moon? Or if aliens have landed, or anything?

Bullitt

05-07-2010, 05:54 AM

Great, they are canceling trades that dropped 60%. What about the ones that dropped 20%? I'm not impressed. 287 trades on a volume day of over 10 billion shares on NYSE alone. I'm actually laughing right now. Don't believe the bad guys are getting hit here.

poolman

05-07-2010, 07:16 AM

http://www.youtube.com/watch?v=eTsvMd7fqxk&playnext_from=TL&videos=G_E2RZtJWi0&feature=sub

James48843

05-07-2010, 08:07 AM

http://www.youtube.com/watch?v=eTsvMd7fqxk&playnext_from=TL&videos=G_E2RZtJWi0&feature=sub

Hahahahahaha....

The rich get richer. the little guy gets it in the shorts.

You think the markets are real? No way.

The guys with the gazillions....are taking even more.

You want a tip?

Here's a tip.

Invest in ammo, water, and dehydrated food.

fabijo

05-07-2010, 08:32 AM

You want a tip?

Here's a tip.

Invest in ammo, water, and dehydrated food.

You're beginning to sound like what the media calls a "right wing extremist!" :nuts:

James48843

05-08-2010, 07:02 AM

James48843

05-08-2010, 07:26 AM

It's kind of interesting to do comparisons between what's happened over the last two years, and what happened back in the 1929-1930 time frame. Here's the chart from back then-

See, back then we had this big plunge in 1929, and then it fought it's way back up for a while. In fact, if you look closely, it looks striking similar to the comeback we've experienced over the last year to so- steadily making it's way back towards the higher areas. Here's 1929-1930:

9348
Nice, isn't it?

Now compare that to the latest chart we have- where we had a big plunge in 2007- the a claw back until this week- and then this week the drop off the cliff-

9349

I would note that Thursday we traded over 8 billion shares- and Friday was 7 billion. That's about double a normal trading day over the last year. Not sure what to think- other than to say that with that kind of volume, it's not done yet acting crazy.

Then- we see what happened later back in the Great Depression:
9350

Comparisons? Well, back in 1930, after clawing it's way back up for a bit- we then turned south again. And over the next couple years following the post-1929 crash and 1930 recovery, we dropped another 86% by the mid-1930's.

Scary, isn't it?

One thing you can say- is that the 1929-1930 crash and rebound took a much shorter period of time that the crash and rebound we've seen over the last two years today. Maybe a lot of that stimulus slowed everything down, time wise. Or maybe it's just plain different this time. I'm not sure which camp to be in at the moment.

Are we duplicating 1929-1930?
I don't think so.
But hey- you never know.

tsptalk

05-08-2010, 11:05 AM

How about this?

Live audio feed from trading pits on Thursday at 2:47.

I'm not sure exactly what was traded, but the audio track is pretty interesting...

At one point you can hear the guy say "Morgan Stanley is coming in" as they try to intervene- but even that one is blown away-

And then- it suddenly reverses and goes the other way- and then again collapses-

This is what is happening on the floor during one of those crazy sessions-

That was very interesting. How in the world do they keep up with those trades?

Those were S&P futures contracts being traded and at one point there was a 10.00 spread between the bid and the ask (1060 bid, 1070 ask). It is usually 0.25 or 0.50 at the most. Crazy stuff.

Bullitt

05-08-2010, 11:37 AM

I'm guessing that's a trader on the futures floor, maybe OEX? He's probably talking to his 'HQ' trading desk. They tell him what to do and he tries to get the best price and also tries to hide his bias so as not to give away an institutions intentions. Pretty amazing, I've read that the guys on the floor are more efficient than these algorithmic bots that we have running the show these days.

Check out this movie (http://www.tsptalk.com/mb/showthread.php?t=7722&highlight=trader) (if the link is still good). Paul Tudor Jones shows how it's done in the 80's leading up to the crash.

My question is, who stepped in this past week on the buy side? Who put a floor under the market?

Bottom line: This is the point where the Titanic hit the iceberg. Nobody knows what the hell happened yet, but it's time to grab a life jacket.