Interesting how CNBC keeps saying this was a market glitch. If you ask me this looks like an old trading technique where a big player dumps a large position to force stops to kick in, and then buys the stock back at a much lower price. Normally this is done on individual stocks, for smaller 1-2 point swings.
Think about this, if you knew the dow was going to go down 750-1000 how much money could you have made. you short the futures, and put cover limits very low, you then line up individual stocks and do the same. next you "fat finger" a basket of sales including P&G, accenture and a few futures, and poof. The market drops 1000 points, you cover all of your shorts and go long at the bottom. In the futures market you just made 10x your money in 35 minutes, and you now have huge positions build in stable dividend paying stocks.
Now does anyone really think this was an accident vs. a very calculated plan by a trader with access to alot of capital?
The worst part of this is it looks like another big player got slammed in this, but they were able to convince the NYSE & Nasdaq to cancel the trades. Imagine if you took cramer's famous call and bought P&G at 49, then sold at 55, you are now short P&G at 55 because they canceled your buy...
good point - stop loss orders are automatic. Like if I bought PG at $60 and put a stop a $56, it would have triggered. Then today I'd be buying back at $60!!!
Can't begin to explain how infuriated I would have been in that scenario. Meanwhile Cramer buys his 50k @ $48..... UHGGGG!
Stop loss orders are not automatic if there is a zero bid situation like on Thursday during the crash. Orders get routed to the best available bid and that may be a penny bid. Many stops loss orders were blown out and ultimately stopped out lower on Thursday.
s4kev2001, are you a trader, let's be honest you can't tell me other bigger traders don't push a stock slightly past a resistance point just to force stops to kick in, and then pickup the shares that get stopped out. This is a simple technique big traders use to build positions. All I'm saying is it looks like someone decided to take the technique to a bigger scale and do it with the stock market. End result the market dipped and then jumped back. Bottom line in the market if people lost billions on one side of a trade others who took the other side of the trade made billions...
This was way too big for that scenario to happen. Not saying that it cannot happen but something so large would surely bring the scrutiny of regulators very quickly. Not to mention in this environment the punishment would be extremely steep.
There's a story on the yahoo finance homepage thats right on the money. It sites computers not humans as the culprit. Too many of the algos in place these days are very similar in nature and virtually have the same thresholds. As these things under the right conditions are lemmings with suitcase nukes.
Right on. Doesn't anyone see that Osama Ben and his group of anti-American's could pull this type of manipulation so easily.
They have the money and the skills to break the bank. If the government can't come up with who had a "fat thumb", that is more proof that the rest of the story is not being told.
Osama wants to ruin the USA and he started with 9/11 and now he sees how easy he can use our greed to do the rest!
I watched Cramer that day, bought PG in the $50's, could have got it lower but my fingers weren't fast enough. I don't think I'll forget that moment! Never owned PG before, but now I have a nice start.
We have a very excellent SEC Chairperson in Mary Shapiro. She takes her time for investigations because she wants to do it right. I did not like how the MM's playing PG down to the low 30s.
Lets expose those individuals who are doing this type of trading. Lets see them in front of a camera. I want to see if they got a fat finger.
If you got a beef let the SEC know about it:
SEC Center for Complaints and Enforcement Tips
Looks my strategy is panning out. The euro is up big on the bailout news and all the commodity stocks I bought last friday are up 7-8% across the board.... booyah. I will taking my gains today as this bounce will be short lived IMO.
"this bounce will be short lived"
A 400 point gap up is a bounce to you? More likely that your short positions are bouncing into the trash can. The EU bailout is bigger than you think and is anything but short lived.