Okay… time to take a deep breath.
Today was an historic market day. First for the computer driven plunge that was seemingly unstoppable, and then for the heroic rescue that at one point brought the whole mess back to green (Nasdaq) or close to it (S&P and Dow).
In the US “”markets””, today was a battle royale between the big computers that drive the action and the Plunge Protection Team (PPT) (which really needs to be re-named the Broken Market Team).
We had no less than 4,500 mini flash crashes by 10:00 this morning. Most of those happend before anybody could figure out what was going on:
(Source)
A flash crash happens when order volume overwhelms the bids/asks, and the price utterly exceeds what anybody is willing to pay for or accept for a given security. Buyers simply disappear. This is evidence of a broken market, one utterly wrecked by the rise of the computers and high-frequency trading (HFT) algorithms to the extent that it is now “normal” for markets in individual assets to break.
But, even given that, today was a true outlier.
In essence, today was another “flash crash”. So we anxiously await the SEC’s final determination, in four to five years, that a 30-something year-old living in his parent’s basement in some other country was entirely responsible for this mayhem. Presumably using a $500 software package.
[Note: the above references the fact that the incredible “flash crash” of May 2010 was, in the eyes of the ever-precise, accurate and timely SEC, entirely the fault of one Navinder Singh Sarao, a then 32 year-old who doesn’t drive, and lives in his parent’s basement in a London UK flat, was single-handedly responsible for the whole 2010 flash-crash debacle. You know how this makes for a much nicer and more tidy explaination than admitting we have a broken market structure that the SEC is utterly inept at regulating or enforcing.]
Regulatory farce aside, there are very serious things happening right now and I want to apologize in advance for not being able to properly cover them all here in this article. Some of the developments underway I do not know, some I have not digested, and some I simply don’t have time to write about.
by cmartenson 
