Flash Crash 2nd Anniversary This Weekend!
I was rummaging through some old posts on our Trader’s Forum this Friday evening with a cold drink in hand and suddenly realized that we are coming up on the 2nd anniversary of the famous Flash Crash in 2010. I remember that moment clearly–
Traders awoke that morning to images of violent protests and mob scenes on their TVs–emanating from Greece. The US stock market had already been under some pressure, and the futures were flashing triple digit red. After closing down a couple more long trades that I had let linger too long– and playing a few shorts in the morning, (but otherwise staying mostly to cash as I had seen the ugly charts in the days preceding), I went off for lunch at one of my local diners.
I arrived back to to my trading room at the house around the 2 o’clock hour to see a Dow plunging….it was down 700 points! Even I was stunned by that- It was too late for a couple of long term positions that I held, so I just sat tight and hoped for the best….suddenly, we were down more….800, then 900…then 1,000 points down! Wow! It happened literally in about 3 or 4 minutes….there wasn’t time to react to anything….I just watched the few stocks I had that day either swoon…or rise if they were the short ETFs I had bought–during that crazy several minutes time-frame– with CNBC playing on in the background of my office.
But, then the computers that had caused the Flash Crash to begin with, suddenly found buying strength….. the Dow and other indexes began their big bounce ( I recall that TRIN was down double-digits at the peak, so TRIN was forecasting a strong bounce)….I quickly sold one stock that I was caught with as it rallied back. I don’t quite recall where we ended the day, but it seems like we made back about 600 points from that low by the close.
I’m sure that some of you readers also have memories of that day.
Now, flash ahead two years later….
Fittingly, May 6th of 2012 is the day of
the French presidential election….and Greece is to vote on its new
parliament on May 6th too. These are TWO critical events for the stock and bond markets around the world….and it takes place tomorrow….on a Sunday.
As I noted on our popular Trader’s Forum at TalkingStocks.AceStockTrader.com
this past two days, the charts have gotten very ugly, and the set-ups for ACCELERATED SELLING are in place. I realize that many traders may be expecting the outcome of May 6th 2012 to be a “sell the news event.” Even I have thought this for most of the past few days….except for the fact that the charts have been flashing MAJOR WARNING in many cases, especially in leader stocks like AAPL and GOOG.
Furthermore, a look at the French and Spanish stock market index charts also shows the set-up for a possible crash in those two markets! The US and German bond markets have seen their benchmark yields fall to near record lows as money flees riskier investments. The TRIN chart has been selling off the past 4 out of 5 sessions, but there has been no capitulation signal yet–similar to what we saw in the great 2008 late summer collapse.
Perhaps nothing major will come of it? But, I am at least putting out the word tonight that the set-up is there for a possible stronger spill. Does this mean we will have another Flash Crash come Monday or Tuesday? Who knows…that would be wild speculation to say it would be a certain event, but I do believe that the set-up is there for some stronger selling before we find a firm bottom area of support.
The computers and the Quants that program them always seem to figure a way to reverse things when we least expect it….and if they can’t do it, then they usually leave it up to “the Bernank” to talk the markets back up. There’s nothing quite like a few gentle, soothing words from Uncle Ben to bring relief!
Anyhow, I’m reminded of the Flash
Crash, and I had saved this link from www.CNBC.com a few months ago which reminds us
that Flash Crashes are more common events than they were once thought to
Whatever the outcome of Sunday’s elections in Europe, it’s probably a good thing that there will be no trading in the US on May 6th of this year! Do “the stock gods” become angry on this date in even-numbered years?