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Trading Error? We Don’t Buy It.

Mac Slavo
May 6th, 2010
SHTFplan.com
Comments (19)
Read by 187 people

As most of America knows, the stock market collapsed nearly 1000 points today and then, just as fast as it tanked, it rebounded. Initial reports pegged the stock market woes to Greece’s debt crisis. As massive amounts of funds seemed to be shifting into US Treasuries, corporate bonds and stocks took a serious hit.

At around 990 points, which was about 10 points shy of the stock market engaging the equivalent of the emergency gas shut of switch, we saw a turn around in the other direction which was almost as rapid as the drop.

Rumors began circulating that the event was triggered by a trader at a large institution hitting the “billion” button instead of the “million” button by accident, and fingers were pointing at the CitiGroup trading desk. Citi has since denied that any erroneous trading occurred on their watch. The SEC is investigating the incident, which means whatever we learn about this will be redacted and modified to suit Wall Street’s needs.

The last thing that it could possibly have been, of course, is that investors were shaken by the fact the contagion is spreading to Europe, and that this may be a pre-cursor to what’s coming to the USA shortly. While we don’t doubt that a major trading house may have been involved in the move, we are cautious about believing that it was an “accident.” We realize accidents happen, but we are hesitant about believing that an accident was responsible for the largest intra-day drop in the history of US stock markets. We are talking about tens of billions of dollars in capital flows here.

The fact that the decline almost triggered an emergency shutdown suggests that the so-called Plunge Protection Team (aka the President’s Working Group on Financial Markets) went into action to turn the markets around.

The story about an erroneous trade may have been nothing more than an attempt to instill confidence in markets, and perhaps it will work – temporarily.

It was just a mistake. Move along sheeple. Move along.

With 98% of US investors getting their financial advice from mainstream networks like CNBC, it is possible that we will see a rebound in US stock markets for the time being.

Let’s give the powers that be the benefit of the doubt and say that it was a mistake. If nothing else, this proves

1) That stock markets are extremely volatile

2) That a single instution, or group of instiutions using computer trading programs really can manipulate our stock markets

3) Wall Street has the ability to bring the United States’s stock  market to its knees in a matter of MINUTES.

Since we really don’t know what happened here, we’d caution those holding long stock positions to set tight stops in case this wasn’t an accident. We’d also caution those on the other side of the trade, betting that the decline will continue, to set tight stops as well. If we’ve learned anything in the last couple of years, it’s that the big investment banks will do anything to get their hands on your money, even if they have to take it a penny at a time across millions of investors – they have programs designed just for this specific purpose.

Paper trading can be fun. But if you want to preserve wealth, think long-term and forget about day to day movements and leverage unless, of course, you’re a Congressman with inside information and no laws to prevent you from trading on this information.

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Author: Mac Slavo
Views: Read by 187 people
Date: May 6th, 2010
Website: www.SHTFplan.com

Copyright Information: Copyright SHTFplan and Mac Slavo. This content may be freely reproduced in full or in part in digital form with full attribution to the author and a link to www.shtfplan.com. Please contact us for permission to reproduce this content in other media formats.

19 Comments...

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  1. Paul Revere says:

    Get out of the volatile stock market and any other ‘paper backed’ assets like bonds and currencies, including the U.S. dollar.  Do it now. (keep only 3-6 months of living expense in U.S. dollars)    Get out of your 401K, IRA, or pension plans now or risk losing them to higher taxations and speculative manipulations of  the criminal syndicate comprised of New York based bankers, the Federal Reserve, and the Obama administration.   

    If you get out of your retirement plans early you will take a intial 30% tax hit from Uncle Scam but if you invest in physical gold bullion or coins with the remaining 70% you will make up the 30% loss and then some in the form of appreciation of gold assets within the next 6-8 months.  

    Why?   Ben Bernanke is going to inflate the U.S. dollar further in that time-frame to pay for bailing out all of Europe, Ukraine, and 34 U.S. states that are now insolvent.    Get out of your retirement plans now or risk losing everything you’ve ever worked for and own.    

     Invest in gold, silver, food,  guns, arable land, and emergency supplies.   The bankers, the federal reserve, and  U.S. government will not help you in the coming national emergency that they are creating by their continuing  policies of  deceit and fraud upon the citizens of this Republic.  

    If you voted for ‘hope and change’  then none of the above is necessary.      

  2. schaef says:

    Well said, Mac. Most of the people I work with were very skeptical of the “b” button theory, and believe that “the invisible hand” made itself “visible” for a few minutes.

  3. PR, I think this is good advice for the most apart, especially for those who voted for hope and change.

    RE: 401k’s and IRA’s — Before President Obama’s term is up, I think they will try to make a move against individual retirement plans and mandate annuitization.

    Basically, they are going to do what Argentina did and jack everyone’s 401k’s and IRA’s so they can keep the union pensioners happy because their unions blew everything on derivatives and stocks and bad investments, and committed more than they had to commit.

    Pensions are going broke, and in the NEW America, this means they are going to take the retirement funds of those who didn’t go broke and distribute accordingly.

    SOURCE: http://www.humanevents.com/article.php?id=36823

    And like you said, even if the Republicans stop this, Mr. Bernanke will just print until your 401k assets are worth nothing. And if you happen to make money in your 401k by choosing good investments that preserve wealth, such as gold, they’ll just tax you at 90% and wipe you out that way.

    No way out, it seems.

    Schaef — no doubt, I think you are right about the Invisible hand(s). This was no mistake. No way.

  4. justcallmeray says:

    Test run. Let’s see what the reaction will be.

    They control the vertical. They control the horizontal. They control all that you see and hear.

  5. BleakoEcobamics says:

    I dunno.  I think it well could have been a mistake that triggered it.  You’d be amazed how pathetic the systems are on wall street, including the exchanges.  And the traders often can disable the confirmation windows.  This article is old, but informative:

    http://ftalphaville.ft.com/blog/2007/03/16/3207/the-curse-of-the-fat-fingered-trader/

    That said, the ensuing selloff that it triggered certainly wasn’t a mistake, as the HAL9000s all began spewing stock like yesterday’s salmonella sandwich. That is the part everyone should be afraid of.

  6. Rick Blaine says:

    +1 to everyone.

    The “fat finger” theory, as some are calling it,  is a fat crock of    $#!^.

    Sure, it may have been driven by quants/HFTs – but they were not just reacting to one bozo hitting a “b” instead of an “m.”

    Tomorrow will be interesting either way.  That is, my guess is that there will be another big move…though it might not necessarily be down.

    Also note the strong moves the dollar has made in recent days…it SHOULD be a “get out of stocks” signal – but you never know with the way this circus is rigged now.

  7. Circus is right… and the clown isn’t putting a smile on my face!

  8. Henry says:

    The Democrats WILL NOT allow the market to crash on their watch.
    Today, you have been given the emperical evidence.

  9. Colonel X says:

    I have been encouraging all of my clients and friends to get out of paper assets since July 2007. Please consider goingoffshore with some of your assets to safe havens anbd safeassets.

  10. Tony says:

    The S H T F!! Hold on, the secret is out!

  11. Diane says:

    Agree with all comments except Henry & Bleako.  This was no mistake. 

    Who knows why it happened … certainly appears to be some sort of financial terrorist attack “warning”  to someone or some group.

    The precipitous drop stopped just 10 pts before the gas shut off valve would have been triggered … very odd.

    I believe this was some kind of warning to stop something from happening … but it also shows us how the powers that be can crash this market … in a matter of minutes … anytime they want.  And they will … when they’re ready to.

    The advice being offered by so many to get out of paper assets is good advice.  In my opinion, those that continue to believe in the mulitple shams being perpetrated on the American people and stay deep in denial refusing to see  that something (even if they don’t understand it) is seriously wrong will, at the end of the day, have themselves to blame for having their wealth confiscated if they do not heed this good advice.

  12. BleakoEcobamics says:

    Diane,

    My comments come from years of working besides folks who program and run back end operations from wall street … and were specific to a possible bad sell order.  If you followed the link you’ll see it’s not without precedent. 

    The ensuing robot high frequency frenzy that ensued was NOT a mistake, call it what you will.  Personally I believe much of the disaster we are in is due to incompetence and greed vs. carefully orchestrated terrorism.  In general, these people are just not that smart. 

    BTW – there is no circuit breaker after 2:30 for 10%, but it does help to bolster the conspiracy theory to maintain that “fact.”  I’m sticking with Occam’s razor until otherwise proven.  Not that I don’t think we’re heading to hell in a handbasket, just different reasons.

  13. Bleako — thanks for the info on the 2:30 circuit breaker. I was not aware of this.

    I suppose we should go with Occam’s razor on this one — but what fun would that be?!  🙂

  14. Diane says:

    Thanks for your response Bleako.

    I’m certain you are far more knoweldgeable than I on the specifics of the market and believe you are correct with your points and statements regarding incompetence and greed being a factor in yesterday’s events.

    I too was not aware of the 2:30 circuit breaker.

    But, I also feel there are too many facts that point to orchestrated terrorism being a factor (in various other instances besides just yesterday’s stock market event)  that to classify those facts as “conspiracy theory” isn’t necessarily accurate.

    I don’t claim to know what was behind yesterday’s event (hey … I had to look up Occum’s razor!), but I am extremely skeptical of the MSM “fat finger story line”.  The reality behind it is probably a combination of incompetence, greed and calculated intent.

  15. Will says:

    In MSM today is that Obama now supports some type of audit of the federal reserve – certainly that would have been know by the banks ahead of the article hitting MSM sites… connection??

  16. Dave says:

    I laugh knowing that there are still people in the stock market!
    I’ve been in gold since 06 and have doubled my money.
    I would take possesion of any 401K before it turns into another “201”K…
    Not only that,in the near future you may be mandatorily volunteered to invest your 401K in treasuries since the Chinks and everyone else is losing interest in them.

  17. michael says:

    Mac,
    please be aware that
    “we’d caution those holding long stock positions to set tight stops”
    does not necessarily help in extreme volatility or market meltdown scenarios.
    As read on Zerohedge, people with $230 stops on AAPL got filled at $210 during the flash crash, only to see the share price rebound to $238 a few minutes later.
    As a normal investor (not daytrader) in this environment, if you think you need to put in stops you probably better get out of the market alltogether. And only use limit sell and limit buy orders to not get frontrun by HFT algos.

  18. zukadu says:

    If you want to understand what is happening NOW in all financial markets, try to find a copy of Richard Nie’s Book: The Wall Street Gang written about40 years ago. It predicted everything that is happening with respect to viotility and manipulation of the market.

    I think thats his last name, but hey, it been a couple years.

 

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