Thursday, May 6, 2010

Mr. Toad's Wild Ride

An evening post for you.

Mr. Toad's Wild Ride. How else to describe this crazy day in the stock markets?

At one point the DOW had fallen 1,000 points - a drop more precipitous than any day in 2008. By the close that market had recovered - somewhat - and closed down only 430 points.


Perhaps the most stunning development of the day occurred on the NASDAQ. From Bloomberg:

"Nasdaq OMX Group Inc. said it will cancel all trades of stocks at prices that were 60 percent above or below the last price at 2:40 p.m. or immediately prior. The exchange operator said in a statement it will cancel all trades greater than or less than 60 percent away from the consolidated last print in that security at 14:40:00 or immediately prior. Nasdaq said it coordinated the decision with all other exchanges."

Cancel all trades? Ummm... so the market was crashing big time at the end of the day and the Exchange intervened to say... "never mind, your trades which pummelled stock prices at the end of the day are... cancelled????"

Will tomorrow be Black Friday, 2010?

As I have said all year, the magical rally of the past year is a false recovery.

The bounce off the February lows has resembled a low volume Ponzi scheme. It has been driven by technically oriented buying from the Banks and the hedge funds.

Stunningly the anchors on financial television are trying to blame the sell off on a 'fat finger' order that caused Procter and Gamble to drop 20 points in 45 seconds. Are we to believe a typist inputting an order to sell 16 million shares typed "B" for Billion instead of "M" for Million?

"Oops. Crashed the free world. Sorry about that - my bad."


The market plummetted because of its highly unstable and artificial technical underpinnings. Wall Street right now is nothing more than a casino, dominated by a few big Banks and hedge funds.

I invite you to watch this 7 minute interview with Gerald Celente which echos a lot of what has been said here all year:

Meanwhile we now learn that the US Federal Reserve is printing up another $105 billion to send to Greece to help with its debt problem.



Is it being done to bail out more US Banks?

You know, the ones we were told had little exposure to sour European debt? Last week Bloomberg reported that JPMorgan Chase & Co., the second- biggest U.S. bank by assets, has a larger exposure than any of its peers to Portugal, Italy, Ireland, Greece and Spain. JPMorgan’s exposure to the five so-called PIIGS countries is $36.3 billion, equating to 28% of the firm’s Tier-1 capital, a measure of financial strength, Meanwhile Morgan Stanley holds $32.4 billion of debt in the region, which equates to 69% of its Tier 1 capital.

Make no mistake. Bernanke isn't supplying Greece with $105 billion in bailout money to save Greece. He's actually bailing out U.S. Banks—again!

Quantitative Easing is plowing ahead full bore. And we are going to reach a point where nothing will be able to stop this money from eventually entering the money supply.

And when it does, inflation is going to hit with a vengence.

1981 is going to look like a cakewalk of cheap interest rates when all this finally plays out.



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  1. im an active day trade (over 300 trades a day) and i can tell you that this was a legitamate fat finger. I read your posting all the time and agree with you most of the time but not today. what happens is the market is controlled by stupid black boxes, running computer programms and really munipulating the market. Some program got a misquote that had blown all its programmed stops, so the program started ditching its massive position. than other programs stops were reached and every program started ditching there positions because it was way way past their stop loss. Its one of the big faults of this stupid black boxes, they munipulate, but they cant think, "ummm this shouldn't be happening right now," and hold on to their position.

  2. And on a side note (im the last post) i do expect big drops in the market, just saying 1000 points was unwarranted

  3. CME group has come out and dumped cold water on the fat finger rumour. The insist in a statement that there were no errors in trades made.

  4. is wasn't errors, but it was computer programs over reacting, blowing the drop out of control. the drop should never have become that large, just like the half dozen stocks that dropped to 0.01 from $18 (like itmn) or 0.01 from $40 (like acn.) 1000 points should never have happened and thats why it retraced 700 of it in a short time, but stops were triggered and computer programs don't care about the logic and just do what they are programmed to do. I believe the market will come done but not like that, not without weeks of momentum building on the down side before a record setting drop should happen

  5. OMG.

    Day Trader = Borderline illiterate