Wow! Or maybe better Yeeouch!
In the last hour the Dow Jones Industrial Average has been down 1000s points as it fell and kept on falling. Or just 390 points down as it rallied off the bottom.
I don’t know exactly where the index is right now because I’ve taken a 15-minute break from obsessively watching the ticker to write this.
My best guess on what’s happening is that the selling of the last two days and the first part of today finally took prices on the major indexes low enough to trigger massive program trading.
In other words, as happened in 1987, computer programs designed to protect investors from massive losses by selling when prices got too low went into action and in selling created exactly the losses they were designed to prevent.
I’m using program trading here in the loosest sense for computerized trading programs designed to kick in at preset market conditions. I don’t know—and we won’t know until someone takes apart the numbers after the close today—whether the selling was triggered by the price of the actual indexes or by prices in the futures or options market.
As you’d expect on a day like today gold has rallied—back above $1200 an ounce—and safe-haven buying has taken prices of U.S. Treasuries up and the yield on the 10-year note down to 3.33%, the lowest since December 2009.
Purewater, I really doubt any fulfilled trades would have occurred if this was due to a glitch. Nothing lost and as georic mentions opportunities will occur again and again and………..
If this were on the other hand a cyber-attack, then this is unsettling as trades we think we have settled may be unsettled, pardon the pun.
Purewater, I, too, was away from my computer, when I heard the news only 10 minutes before the closing bell. Probably just as well, I could hardly believe my ears (I was in my car) and I knew there wasn’t time to react.
We all now have that other similar experience (2007-8) and as many of you have posted, the difficulty is trying to be smart and still, trying desperately NOT to catch a falling knife.
CSA hit a low of $1.65 and closed at $6.80……
Purewater, I think you’ll have new opportunities in the near future.
Motherf*&*#$, went to the store and missed the whole thing. I’ve got all this cash, just waiting for a day like this. I’m never shopping again.
Yep, looks like programmed selling – every stock’s chart dove down off a cliff bet 02:30p and 03:00p.
francolargo – I envy your nerves. I thought about adding to my AAPL but was looking out for that proverbial knife. Still, if you had to buy one stock amid all the chaos right now, AAPL would be it. I hope I get a crack at it tomorrow.
EZA was down more than 50% at one point. Glitch? or……
I wasn’t really shopping because I haven’t been watching CMI long enough to be confident trying to “catch the falling knife”. I only added to AAPL. You all may now rush out and buy your new iPads! Cheers! 😉
Look at a PG chart… went down 21% albiet breifly. Computer glitch? Cyber attack?
No CMI, but I did add to my DO position.
francolargo, bobisgreen:
How much did you pay for CMI?
francolargo,
CMI and a few others!!!…What an elevator ride…remember 2008??? hm? Just another walk in the park.
Jim – my request is after you’ve had a chance to take a cold shower, of course 🙂
If I may be outspoken…
It’s OK with your friends here if you went ahead and bought your CMI this afternoon! 😉
Jim,
Dow down 4.2% at 03:25pm …
Given the plunge today, if you could write a post about a strategy for dealing with the EU/Greek debt crisis from here on out, that would be great. Also, any changes to the stocks in Jubak’s Picks needed because of the selloff and the threat that it’ll continue? Thanks.
i need a new pair of pants.
Wow… what a ride!
http://www.cnbc.com/id/36997706
“Blame computer trading, margin calls, hedge fund managers with itchy trigger fingers or just too much liquidity sloshing around the system because of low Fed borrowing costs, but this selloff is feeding on itself, bringing down almost all stocks, even those not related to the cause, traders said.”