Friday, May 07, 2010
Skynet is not a Cameron invention after all!
The market ticker: Mr President - Unplug the ***** computers
Well in case you missed the fun and games last night (a welcome diversion from the Elections) the post is what happend. Can it happen here? Well sorry folks to upset anyone but it did. The FTSE went down (in after hours) to a low of 4420 [its now @ 5250].
Posted by techieman @ 12:01 PM (2030 views) Add Comment
31 Comments
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1. Crunchy said...
What happened to Gold? lol
Are the Gold doubters getting it yet?
2. jack c said...
It's time we scrapped these novelty computers and went back to people and paper - Quill pen and pigeon will iron out this market volatility.
3. techieman said...
Jack c - volatility is fine, but this wasnt really volatility and was actually (if you were on the wrong side) very very scary. As the link says there were no bids... anywhere, so market stops didnt work. I thought the fat finger excuse didn't sound right. The link shows yr Accenture question - i.e. down to a penny.
I am trying to point out that this CAN happen again. Its just the way the market is set up. God knows how EStrader did, but i count myself a bit lucky i was on the right side to be fair next time i might not be. All i can say is thank god for "guaranteed stops" in IG :-). Actually worth the spread and the extra couple of points to stay safe.
Imagine if you had a unitised tracker and you were retiring at the time when the market was off 1,000...... You above everyone else should appreciate that really even though it was to my profit that the market moved there (and i could have actually got out and made [what i consider to be] a pretty large amount, that's not really what anyone should want. Either bull or bear.
4. techieman said...
Jack funny enough the S&Ps are now trading at 1130, which was the "bottom" of my range as we discussed the other day. The next thing is the US employment numbers at 1:30 should be interesting.
5. paranoia blue said...
Yes, I made a bit last night.
It will be interesting to see what Wall St does today. The FTSE has been up and down, a few times today, whilst the European bourse, have mainly stayed a lot lower.
6. techieman said...
PB you were right about them not being able to hold it up much longer.... if only i had listened to you ;-).
7. mountain goat said...
Hi TM
What the humans did in the S&P pits, ouch.
http://www.zerohedge.com/sites/default/files/Market%20Crash.mp3
http://www.zerohedge.com/article/panic-and-loathing-sp-500-pits
High Frequency Thieving
8. techieman said...
MG - just heard takes me back.... paper sellers. must be some f*ckity f*cks being blocked in the quiet bits. 79s trading he loses his voice!
60 bid 70 offered... thats scary!!! they are talking limit down move.... "they" probably had to protect that. 10 handles wide on the spread - thats just mad!
I liked the "fat fingered my ass" :-).
9. mark wadsworth said...
Hmmm... swear word with five letters ... sorry, I can't think of any.
10. techieman said...
still selling Greenbacks Le Crunch? Probably yr time has come.... for a while! :-).
11. mountain goat said...
"The height of panic on Thursday was reached shortly after lunchtime in the United States. First some currencies began to fall rapidly, with the euro suffering especially against the Japanese yen.
That could have been an indication that some large traders were unwinding positions. It has been popular to borrow yen at low interest rates and then use the money to speculate in higher yielding assets denominated in other currencies. Anyone unwinding such a trade would buy yen to repay the loan.
Then, within a few minutes, the United States stock market appeared to be collapsing. Some of the decline was real, but another part of it was simply trading gone awry."
fat fingered
12. techieman said...
Apologies mark, i will correct should be "****ing" or "F***ing" or "Fuckin*" .... computers.
I obviously de-fat fingered the apostrophes!!!
MG assume you are ok, since i know you are in the same bear camp as yours truly....
13. Crunchy said...
10. techieman
What I have said about the US dollar still stands. Don't be fooled by the sideshows.
14. jack c said...
techieman - (just got back) my earlier post was all a bit TIC so now back to the serious debate - first of all a good link, secondly a very valid point on the extreme drop - oddly enough I'm in the throws of organising a compulsory purchase annuity for someone and fortunately switched his unit linked pension a few weeks back to a secure deposit fund otherwise his pension pot and the resulting income would have taken a real hammering based on recent trading !
On your other point "U.S. Employment Grows Fastest in 4 Years; Jobless Rate 9.9%" from todays Bloomberg headlines but it doesnt seem to have impacted too much on the markets presumably other concerns have a heavier weighting
15. mountain goat said...
TM yeah just been gritting my teeth and taking the pain. Convinced this market is walking on air and has a long way to fall. Although a few weeks ago I was questioning my sanity based on all the giddy optimism out there.
That blogger you like has an interesting look at the stops that broke yesterday and more importantly the support at the February low http://2.bp.blogspot.com/_TwUS3GyHKsQ/S-NoOFd0sHI/AAAAAAAAFIM/60INGyTEaUs/s1600/spxdaily.png
You expecting a USD retracement from here? I been holding onto dollars partly because I thought the top at the end of March didn't look like the end of the move up starting November. The other waves took a month or more and that was just a quick spike. Also I was out of ideas for alternatives. Most things including gold will get hit when deleveraging happens in a panic.
16. mountain goat said...
Guy goes nuts online during webinar yesterday lol
http://www.businessinsider.com/guy-goes-crazy-while-giving-a-webinar-during-the-crash-2010-5
17. techieman said...
Hi MG - First things first. The 50% move back from yesterday's lows was approx 10,580 dow. We had a high of 10,615 so that looks about normal. I actually took some profits just below the figure on the S&Ps today. I mean just below 1100.
next re the dollar - well i think its done enough for a while, actually warned STR2007 about it yesterday. Obviously though thats just my view. I mean i was looking around mid 140s - although i got paid approx 1.47 for most. The event risk last night was just too big., although it did do what i thought it would (thats always the way when u have no chips on the table).
As for other ideas i would be inclined just to short the stock markets. I think the time to use options is probably past - too expensive, so its out and out futures. As i said IG do guaranteed stops and although i realise that people say the spreads are too big - in all honesty i would rather pay a bit more for relative safety myself. As for Gold - well in USD it still hasnt breached the dec high so not really much to get too excited about.
By the way the guy dong the webinar was me.... thats why i couldnt hit the offers at 1060 S&P [:-)].
As for Daneric, yes i think hes pretty good - he has had a love affair with BIDU and got absolutely taken apart but like the rest of us - he has been a bit premature in his calls. I am glad you managed to hold on to the shorts.
18. cyril said...
Does anyone else hate all this high finance speak or is it just me?
19. mdmick said...
Hi Cyril,
I try to learn from the economic and political statements on this site.
With respect, the language in these posts is beyond me and so I do not enjoy reading through it.
To me, 'spread' means Marmite.
And it seems to be more of a private exclusive conversation.
So, I am not keen on it but what can we do?! It's everyone's forum and if we say "What has this got to do with house prices?" then they will give us a reason why every time!
20. quiet guy said...
@Cyril
I know what you mean. Techie/Estrader/MG/Flashie makes me feel so ignorant sometimes. All I can suggest is never invest in anything you don't understand and don't worry about it.
21. techieman said...
Cyril - sorry but this does affect everyone... I agree though that the detail might be too much detail. The fact is if you have a money purchase pension that will be invested mostly in the stock markets to give you some "long term growth". Since your pension is generally your biggest asset, then it makes sense to me to take a passing interest. Look at Jack's comment about switching into cash.
"What has this got to do with house prices?" Well basically for me at any rate its the correlation, between stock markets and other asset prices. Its a lead indicator or a clue to where we go.
For me the reflation was easier to spot in these markets, and therefore more likely in the housing markets.
Personally i dislike some of the talk of some of the outlandish conspiracy postings, so i just dont read em.
I dont understand though why people shouldnt be confused and horrified by the fact that computers can collapse a market in a matter of minutes. Thats really all this thread is about, and the potential consequences of it.
22. techieman said...
oh and spread just means the difference between the buying price and the selling price. So if you say wanted to invest in M&S shares the price might be quoted as 325 / 330 that just means if you want to buy it will cost £3.30 per share and if you want to sell you will only get £3.25 per share.
The spread on the indexes are normally pretty small, what the guy in the trading pit was saying was that the spreads were 10 "handles" means 10 index points. i.e. 1100 / 1110. Normally the spreads in the pits are very small less than .25 of one index point.
Not rocket science is it!
23. happy mondays said...
TM, What's fat fingered? it sounds rather unpleasant! Just need to know so i can speak some trader jargon...
24. techieman said...
HM
fat fingered just means a typo. Effectively if you press say 9 instead of 6. The rumour was that someone sold i think 16Billion shares rather than 16Million shares. It obviously comes from someone trading with fingers that are too fat to hit the right keys! Actually its just slang.
I dont "buy it" myself. I mean it doesnt sound right that that was the reason for the big falls.
25. happy mondays said...
TM thanks, sounds like myself, but without the financial shockwave effect..So in layman terms, what do you think may have happened?
26. techieman said...
HM - basically sell orders came in and pushed the market down (these are actual human orders), at some point the algos triggered (probably once a certain size of move hit or a certain value was breached) then initiated computer sell programmes. Thats the scary part.
Thats why we talk of Skynet from the terminator films...
http://en.wikipedia.org/wiki/Algorithmic_trading [this explains algos]. if you read the link above it might make more sense. Right im off now. have a good one
27. mark wadsworth said...
Techie, 21: "The spread on the indexes are normally pretty small..."
Now I'm really lost.
Is "indexes" some trader insider jargon slang, or do you mean "The spreads on the indices are normally pretty small..."?
28. cyril said...
@20 techie - I do understand roughly how markets work but I guess it is the jargon that puts me off.
I have a few investments myself but I'm not very 'active' - every time I buy or something it seems to go down and vice versa!
29. mountain goat said...
Cyril - I am not a professional investor, never have been. I find you need to learn the jargon for any subject you are trying to learn. Time and time again I have found that learning something new is like learning a new language. It isn't so you can talk the talk it is because the words of any subject represent some fact or knowledge.
I am trying to learn about investments because I expect to need to accumulate wealth for some time, rather than buy a house (and save in that way by paying off a mortgage). I do pay a subscription for regular investment advice, but I have very little opportunity to discuss this sort of thing elsewhere. Most investors aren't as bearish as me or the people on this site. Most of my friends have no savings or own a house/mortgage. My partner realises that there is a house price bubble but goes into a panic if I discuss investments. I could just stick everything in cash. In fact most is in cash, just not exclusively GBP cash. Sometimes I go into gold sometimes into dollar. It's all money. I have about 10-20% of my wealth invested in other more risky assets like shares/short shares. Also there is the issue raised by TM and Jack C about decisions about my pension.
Sorry if I don't reply to questions promptly my free time is limited these days having become a dad.
30. techieman said...
MG - i think the bulk of peoples money should be in cash, as we have discussed before. Thats because most people cant do anything but buy the market and if nothing else, this post shows that the timing of that may be a nightmare.
I am glad you keep up with Daneric's work. He is well worth the "subcription" in my view. The comments are often quite amusing too.
Mark @ 26 i actually meant index futures, specifically the S&Ps, but you are right in English it should be indices. Good w/end to all.
31. mountain goat said...
TM - the subscription I meant was EWI. I look at Daneric now and then just like look at financial papers. My point was not so much EWI or anyone in particular but that I feel I need advice from experienced traders to help interpret what is going on, how traders view things. EWI suit me because they are as bearish as I am and expect deflation as I do. Thanks for the tip by the way.
Hope you enjoying your weekend. We caring for a vomiting baby this weekend!