Jamesb101.com

commentary on Politics and a little bit of everything else

Last Thursday’s stock fall could have been the ‘Machines’…….

See what happens when you take humans out of the equation?

Computers….The ‘Machines’ just do their thing…..

Traders parsing the mystery of Thursday’s stomach-churning stock-market plunge are focusing on whether rapid-fire computer trading, coupled with the market’s complex trading systems, triggered a free fall that appears to have begun with an order to sell a single stock.

A big order to sell Procter & Gamble Co. shares came a little after 2:40 p.m., when the stock market was already jittery over turmoil in Greece. Minutes later, the market plunged, ultimately declining nearly 1000 points before rebounding rapidly.

The sell order was sent to the New York Stock Exchange, where it caused a log-jam in trading. Suddenly, P&G shares, among the market’s most stable, fell about 35%.

It’s not clear precisely how the P&G trade affected other securities. But the tumbling blue-chip stock helped drag down the Dow Jones index. Traders believe the big drop in P&G was picked up by computer models, which set off a chain reaction of selling in other stocks.

The violent fall has prompted an examination of the limitations of existing market “circuit breakers” and exposed weaknesses brought about by the changes in the character of modern stock markets, where most trading takes place at high speed between computers, rather than directly between human brokers.

At a minimum, traders said, the selloff shows that regulatory oversight of stock trading has not kept up with the changing nature of trading.

“There’s no mechanism in the current system to stop an error from crushing a stock,” said Dan Mathisson, head of electronic trading at Credit Suisse. “The regulators will need to explore restricting the use of market orders, or adding some type of circuit breakers.”

Human ones, guys…

More……..

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May 8, 2010 - Posted by | Breaking News, Computers, Counterpoints, Government, Media, Other Things, PoliticalDog Calls, The Economy, Updates | ,

4 Comments »

  1. […] This post was mentioned on Twitter by James Finley. James Finley said: Last Thursday's stock fall could have been the 'Machines'…….: http://wp.me/pAL4p-2KM […]

    Pingback by Tweets that mention Last Thursday’s stock fall could have been the ‘Machines’……. « PoliticalDog101.com -- Topsy.com | May 9, 2010 | Reply

  2. In the end the logical answer is someone had a sneak peak and the abysmal jobs reports which showed unemployment jumped to 9.9%

    of course in your skewed view everything is fine

    You remind me of someone in a Holocaust work camp that states “life is grand”

    Comment by Timothy Leal | May 9, 2010 | Reply

  3. Open the pod door HAL!

    Fidelity was not allowing anyone to access their accounts this AM saying that they were “correcting” trades made during last weeks crash dive.

    And I didn’t think it was the Feast of the Ascension until Thursday.

    Of course if you screw up and complain they call a security guard.

    Now the question is what is more reliable, the trading system used by Wall Street or your Toyota?

    Goldman Sachs says: Pay no attention to that man behind the curtain!

    Yup!

    Comment by Manila Calling! | May 9, 2010 | Reply

  4. He, he, he…..

    Nothing is on the level…..

    Comment by jamesb101 | May 9, 2010 | Reply


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