I am a short, not in DNDN, but a short seller nonetheless. I normally would not post in reference to a long, but this was wild stuff from an old short-seller's perspective. I have friends who are long DNDN, so I have been watching the action over the past couple of weeks. Ive been in this biz a looooong time, and I can honestly say that I have never seen anything in a listed stock like what happened today. That being said, albeit extremely rare, today's action was legit. I find it somewhat ironic that I again have been reading "The Black Swan" as this highly improbable scenario played out.
If you check the volume going into the lunch hour today in 3 minute intervals (approximately the duration of the selloff), then you see that the 3-minute volume had dropped from maybe 1.5 million shares during the busy morning to 150k shares going into lunch, to 60-90k shares in the minutes leading up to the selloff. All of my friends had stop losses in place. From reading these boards, so did a WHOLE LOT of other people. Expand this thought process across the entire market. There were millions of shares worth of stop loss orders sitting at various prices. Most traders will use a Day Low price or a Tick below Yesterday's Close to trigger their stop loss. Usually an effective strategy. However, doomsday material when everyone on Earth has the same idea. The last 10k+ block traded at $21.49 (close to DayLow). After that, the bids went off a cliff. The next +10k block didnt occur until sub $10. As the price dropped, the stop loss orders that were triggered become active market sell orders. Now, go back to the reference to the volume leading up to this. 30-60k per 3 minute interval. For whatever reason (and my gut tells me that someone planned this - its legal, and if they did, then they are among the trading legends with this move), sellers entered the market just enough to begin driving down the price a little bit. And a little is all it took. Over the next 3 minutes it can be guesstimated that several hundred thousand shares worth of stop losses were triggered - massive sell volume relative to the bids that were in place. I imagine a lot of this was attributable to the fact that everyone was on the sidelines at 1:26pm, awaiting the presentation at 1:30. Large selling with no buying became reminiscent of a bad penny stock when the manipulator leaves the bid. I am going through the floor feed right now and looking at the BestBid and BidSize for each second. There were no sizeable bids. The sell orders just chewed them apart. Lower prices triggered more market sell orders, and so the snowball grew.
Truly amazing. Any sane trader would have had that protection in place. And it was that very protection that screwed everyone. I would love to know if a group of shorts saw this opportunity. It was written on the wall for those smart enough to see it. Hats off if someone out there really pulled that off ... or was it simply a Black Swan event? The world may never know, but it is surely a damn good lesson on how even the best laid plans can go awry.
Sorry for anyone who lost on those stop losses. You played it right, but my gut tells me someone out there played you.
If it is any consolation, the shorts who did not cover in that debacle are sweating tonight. The margin man will come calling for many of them tomorrow.
"That being said, albeit extremely rare, today's action was legit"
I made it to that part of your post. And thats enough for me to know that you are a complete idiot. How you got 52 5 star ratings just proves that everyone on this board is in the same boat as you.
You people really shouldnt be trading. Yea its legit that this stock just happened to get knocked down 45% in 3 minutes right before it was halted. Yea as legit as the Nasdaq. For christ sake you people are idiots
I think what he meant to say is that the trade execution on the slide was legit.
One institution (a single hedge fund of course) could do it. They buy in low, then sell short at a peak. Then they use their cheap shares to match trades for the slide. Since trade execution occurs based on matching bid to ask, their trades will be executed immediately. There's nothing in the law that prevents them from using two accounts to play the role of both the bid & ask side. So they use up their cheap shares to drive the price down, & then cover the large short at the desired price.
The uptick rule would not prevent this, as the hedge fund mgr could simply match his trades to create a minor uptick in price on the slide.
A velocity rule is all that would really work. Automatically halt a stock that shows a 10% or more price decrease in seconds. With a velocity rule in place, DNDN would have been halted on the attempt to match the $21.49 trade. That would have been rejected, & DNDN would have last traded at $24.19 before the halt.
What is the harm in doing this? The only persons impacted are the ones devising the matched trade slide. Everyone else buys time to decide what to do including other institutional investors that have more at stake for the stock to go higher & possess the resources to devise a match trade rise scheme.
This would have definitely slowed the descent on C's stock & only impacts those looking to game the system with a flood of matched trades.
This is good analysis, but you are forgetting the post 2 hours before this happened when someone notified the board exactly what would happen, what the percentage loss would be, that the stock would be halted, and gave the specific time within 3 minutes of when this would occur.
Someone knew, plain and simple.
bidsicle there was a short raid alert put out on several metals(cde) sights timing this and the amt of drop-he was very precise-did you have any oast or present experience in shorting CDE-whats your take on reverse splits and shorts(CDE)--thanks if you care to reply
I'm wondering why no one talked about the strange "200 share purchase for 22.93 at 1:33 EST (3 hours after the halt and 1.25 hours before the reopen of this stock in the extended hours trading). When a stock is halted....there isn't suppose to be trading, right? What happened here? Nasdaq made a correction to keep the shorts who missed their buybacks from getting back in at the low price?
Thank you very much for taking the time to share your insight. I was very shocked to see this play. I think Wall St. is very powerful and they can move markets in their direction as they please.
I would like to know the names of the companies that put out those trades the last few minutes.
Also thanks for the other guy that called the 12:30 CST BEAR MARKET RAID.
I'm still holding my little 507 shares. I'm going to add to my position.
The company came out with very good news today and I did not understand why the stock tanked.
But the big fish in the market has the most influence. The rest of us just try to survive.
I think if you really want to know what happened, this poster is as close as you'll come to the truth...could have been just a handfull of smug sob's who pulled it off. Very calculated.
bidsickle, that post was one of a very rare few on these message boards with common sense and research rather than b.s., conspiracy theories, and lies.
I haven't looked at the T&S myself, although I think I will in a minute just out of curiosity. Today's selloff was unusual in its size, but not really in its form.
If you look at trading in this very stock on April 9th, 2007, you will see why today gave me deja vu. The stock traded more or less flat for a few hours, staying over $24/share. Right after 10:40 am EST, the stock broke below $24, and a cascade of sell orders was triggered. The stock dropped almost to $20 (nearly 20%) in a matter of seconds. I sold just before that collapse, just as I did today (all posted in real time).
When you play a stock like this, you either better be ready to see it go to zero, or you better make sure your stop loss is tighter than everyone else's. That day in 2007, my stop loss was above $24. Today, I had no stops, but voluntarily sold 5/6 of my position over $24.