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Fear and the Flash Crash

posted Feb 14, 2011, 2:23 AM by Ellie Kesselman   [ updated Sep 11, 2015, 12:22 AM ]
This fine recording is courtesy of Zero Hedge and The Internet Archive. It is a recording of market maker activity from the S&P 500 futures trading pit during last year's "flash crash". Futures prices plummeted, then soared back up again, probably due to algorithmic trading, although the event remains the subject of investigation by the U.S. Securities and Exchange Commission, among others.

This is one of the most dramatic audios I've ever heard. It is approximately eleven minutes in length, audio only. It was recorded in the S&P index futures pit on 6 May 2010, when the DJIA crashed by nearly 1000 points in 20 minutes. 

More on the Flash crash from The Slope of Hope Wiki

"The flash crash was a sudden drop in U.S. equities on May 6, 2010. Although equities had been generally weak all day, the market swiftly went from a loss of 200 on the Dow Jones 30 to a loss of about 1,000 points, quickly recovering to close at a loss of about 360 points for the day.

At first it was implausibly suggested that a trader had typed a "B" for "billions" instead of an "M" for "millions" when trying to execute a sell order for Procter & Gamble stock. Setting aside the absurdity of a trader's workstation that called for such bizarre order entry, it seemed evident shortly after the crash that a mishmash of old (and deliberately slow) technologies collided with high-speed trading systems to create a complete lack of liquidity in the marketplace."

The Slope of Hope Wiki is part of The Slope of Hope website. It is run by Tim Knight whose very first stock trade was on October 19, 1987, or Black Monday. 

Tim Knight is a permabear. I have a strong ursine tendency too, so that is (partly?) why I like reading Zero Hedge.