[carltonp]

06-03-11 12:53 AM
Hello Traders,

Can someone tell me if it is really possible for a large investment bank/house to control the prices of all the stocks comprising DJIA? The reason why I say that is because at precisely 14:17pm all 30 stocks from DJ 30 tumbled - and at the same time. I mean they were steadily climbing then boom! They all tanked in unison. I could understand if they lost steam and were sold off gradually, but to suddenly drop and then rise again within minutes leads me to think it's possible for a few large banks to make that happen.

I was trading the mini Dow at the time and my style of trading is to buy/sell a contract depending on where the majority of the 30 stocks are going at the time of placing a trade. So I was long around 14:15 and the index was moving up in line the majority of stocks, then everything crashed - I mean all stocks just crashed in unison. I actually thought there was some outside disaster, but then all stocks started to appreciate. Of course I was stopped out, however I would love to know if there was any news event that happened today to cause the stocks to behave the way that they did or was there some entity involved?

Would love to get your comments

Cheers

Carlton

[Tams]

Originally Posted by carltonp »

06-03-11 12:53 AM
Hello Traders,

Can someone tell me if it is really possible for a large investment bank/house to control the prices of all the stocks comprising DJIA? The reason why I say that is because at precisely 14:17pm all 30 stocks from DJ 30 tumbled - and at the same time. I mean they were steadily climbing then boom! They all tanked in unison. I could understand if they lost steam and were sold off gradually, but to suddenly drop and then rise again within minutes leads me to think it's possible for a few large banks to make that happen.

I was trading the mini Dow at the time and my style of trading is to buy/sell a contract depending on where the majority of the 30 stocks are going at the time of placing a trade. So I was long around 14:15 and the index was moving up in line the majority of stocks, then everything crashed - I mean all stocks just crashed in unison. I actually thought there was some outside disaster, but then all stocks started to appreciate. Of course I was stopped out, however I would love to know if there was any news event that happened today to cause the stocks to behave the way that they did or was there some entity involved?

Would love to get your comments

Cheers

Carlton

what chart resolution do you follow?

[SIUYA]

a couple of possible reasons.
1... a large pension fund/insto decided to sell a basket of stocks.
2....a large seller came into the futures index and arbs sold off the underlying stocks (you would really need to nail down which came first)
3.....it might have been a complete coincidence
4....algos might have been related to something else that moved and hence pulled bids which set off a chain reaction for other algos that rely on measuring bids etc;

[Ingot54]

Originally Posted by SIUYA »

a couple of possible reasons.
1... a large pension fund/insto decided to sell a basket of stocks.
2....a large seller came into the futures index and arbs sold off the underlying stocks (you would really need to nail down which came first)
3.....it might have been a complete coincidence
4....algos might have been related to something else that moved and hence pulled bids which set off a chain reaction for other algos that rely on measuring bids etc;

And the moral to the story?

Originally Posted by Carltonp

I mean all stocks just crashed in unison. I actually thought there was some outside disaster, but then all stocks started to appreciate.

Of course I was stopped out

Of course - you were MEANT to be stopped out.

The flash crash of May 6th 2010 still has not been officially explained, but whatever caused that even seems to be at play again ... 13 month later. Back then the DOW dropped about 900 points in a few seconds, and then recovered "in a few minutes."

According to Wikipedia:

"It was the second largest point swing -1010.14 points - and the biggest one-day point decline - 998.5 points - on an intraday basis in Dow Jones Industrial Average history"

It proved fairly lucrative then, for those with the "right" kind of contingent orders, or the fastest brains ( think the former) and as making money the easy way can be addictive, methinks the money-makers are again flexing their electronic muscles.

"They" are just smarter now ... the flash crash caused a lot of bad press for people like Goldman Sachs, so it makes sense now to do the same thing on a smaller scale, and less frequently.

The easiest way to find out what happened would be to find out who stood to gain from it (or who actually gained from it.)
.

[Tams]

..........
aren't life great?

Originally Posted by ingot54 »

and the moral to the story?

...

Of course - you were meant to be stopped out.

....

..........

[SIUYA]

there is nothing moral and/or no moral to the story, there is probably not even a conspiracy theory....point is this, and has IMHO always been a part of the market and is simply more pronounced now and quicker....no matter the reason behind it. Adapt, learn, adapt....lengthen time frame.... why as a retail person do people keep trying to compete and /or complain or even try to understand and think they know exactly what is happening with/about the algos.
I dont think my 1998 Nissan pulsar with 180,000km on the clock is going to beat a top of the line new mercedes off at the lights, and if it did, delusional would be a word that comes to mind.

[Ingot54]

Originally Posted by Tams »

..........
aren't life great?..........

lol ... life are great indeed!

[BlowFish]

I can remember the first time I experienced similar. I traded stocks at the time and had a couple of different quote grids that monitored a decent number of stocks. Well I am sitting there enjoying a coffee and bang everything went green....I mean absolutely everything. And not just a little bit green full on green green. I did actually guess the cause (more luck than judgement) it was a completely unscheduled rate cut (a quarter point if memory serves).

Anything 'fundamental' that affects peoples perception of 'value' can cause massive amounts of money to be moved between asset classes. If it is fairly unexpectedly this can happen extremely suddenly and quite violently. Whilst fairly rare it's all part of trading.