A few days ago I posted an audio of tradersaudio.com squawk of the “flash crash.” Today I found this video enhanced edition directly from Ben Lichtenstein on You Tube. May 06, 2010 CRASH – S&P PIT Live Squawk Broadcast – TradersAudio.com. I still like re-living it and the charts help visualize the day! 
Monthly Archive for May, 2010
Page 3 of 4
Wow, gold is on a rocket….but eventually the rocket fuel runs out. Have you noticed all the gold commercials on TV? On the business channels like CNBC, FBN and Bloomberg, they are trying to sell us coins and bullion. On “regular” channels they want to buy all our chains, bracelets, rings and teeth. So…do you think we’re in the middle of a gold bubble?
Y’know, the SEC could announce a circuit breaker rule soon, but why not instead reinstate the uptick rule and stop the naked shorts from manipulating the markets? But nooo, that would upset all the big boys on the playground…
DRYS and CSCO reported after hours. Neither had blowout reports and both are trading below today’s close, but not in the red…yet. CSCO could weigh on the QQQQ and Nasdaq and all the techs. Tech and banks have been leading the past couple days, so I’d like to see that continue.
We’re going to have to test the 200ma or at least get close to a recent low before we go to much higher, so I’m keeping a close watch on the inverse ETFs like: TZA BGZ TYP FAZ SDS. Play these on a short term and/or to protect some of your long positions.
Futures mildly unexciting this evening, hanging around where they closed, plus or minus a point or two. Initial claims on Thursday better continue to the upside. The slightest news, good or bad, could move this market in either direction. 
All we’ve done is postpone the problems:
Even though one of the worst scenarios — a Greek default — has been avoided for now, in many ways solving the bigger problems have simply been postponed and new issues could emerge in places such as Portugal and Spain,
said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Morgan Stanley Securities. Read the whole story, Germany Backs Euro Package as Markets Sober Up.
Do any of you use Twitter or StockTwits to keep up with trader sentiment during the day? This morning these 3 tweets popped up all at the same moment this morning, all looking at the same ES S&P e-mini futures:
midget : $ES_F another CRASH coming along be cautious
Scalper68 : so, anyone buying this gap $ES_F
desifinance : $ES_F futures are deceivingly negative this am. I think we are in for a ride. Push down early followed by buying.
That pretty much covers the gamut of thinking….from crash to a move up! By the way, desifinance had the right prediction. 
And also, don’t forget to follow me, WhatTheTrading, at Twitter or StockTwits.
Some interesting stuff for your web surfing pleasure:
The forthcoming golden age of stock picking
We got back a lot of the Thursday/Friday debacle…which relieved a lot of downward pressure. But will it hold? The European economies are still looking fugly. Is the U.S. far behind?
Monday followed the tradition of being an up day. Will “Turnaround Tuesday” follow thru to the downside? Futures are much calmer this evening than they were yesterday and playing around the breakeven area….but Asia looks like it wants to play.
VIX came down 30% today but still elevated from just a week ago. New Record for One Day Fall in the VIX.
And one more look at what happened last week: The Real Story Behind Last Week’s Stock-Market Panic.
The markets are climbing the wall of worry…and there’s plenty to worry about….there’s Europe and Asia and the U.S. economies for just the first hundred things. But look at those futures climb this evening! And why is that? Maybe it’s all about the euro
today? Here’s a blurb from the Wall Street Journal,
The European Union agreed an audacious €750 billion bailout plan in an effort to stanch a burgeoning sovereign debt crisis that began in Greece but now threatens the stability of financial markets world-wide.
The S&P futures already have a 16 point range and are up 30 handles from Friday’s close….and the markets have only been open 4 hours on a Sunday evening. This may be an interesting Monday.
Here’s some good reading on what really happened in Thursday’s 10-minute crash:
Feds trace flash crash to Chicago
Market Fragmentation May Get Review After Stock Drop
And more general stuff….
Sudden Selloff Rattles Small Investors’ Faith in the Market
I took it easy today and read the book American Sucker by David Denby….a story of a man in a mid-life crisis looking for redemption and riches by trading tech stocks about the time the tech bubble was bursting. The author is a writer and movie critic with the New Yorker magazine so you’ll see many references to movies and other journalists and books throughout the book.
The book doesn’t show up in any stock-related book lists I think because he failed as a trader. But I think his emotions and actions are very typical of many new traders that just jump in.
If you were trading in the tech bubble of the late ’90s and early 2000′s, as I was, this book will bring back a lot of memories. The author explains many of his motivations, actions and results of his life, including trading, his mistakes, losses and ever-present hope of making money…that never came.
His emotions and reasons reflect the actions of traders then and now….things like greed, listening to other’s tips and recommendations, and rationalizing news and data to fit his wants. He talks about ImClone’s Sam Waksal, Merrill Lynch’s Henry Blodget, Dennis Kozlowski and Martha Stewart. The books ends pretty much with the demise of Waksal and Blodget and other tech bubble scandals.
You won’t find any info on technical or fundamental analysis, economic or financial theories, nor any trading strategies. It is an entertaining book, although you feel sorry for a person losing so much, both fiscally and emotionally. But you may find yourself walking in the author’s shoes, especially if you too think that trading stocks is a get-rich quick way to life. As Debny said,
“I wanted to be wealthy…. I didn’t make it.”
Here’s an audio clip that is going viral among traders. It is Ben Lichtenstein of tradersaudio.com squawking the crash on Thursday afternoon. If you can recall looking at your charts at the time of the breakdown, you can re-live those moments listening to Ben. Listen to the crash. There are a few breaks in the transmission but listen all the way though. It comes up just as fast as it went down. Ben’s excitement is contagious!
Ben Lichtenstein and tradersaudio.com has NO affiliation with WTFtrading.com. I did subscribe with him for about 6 months a year or two ago when I was learning S&P e-mini trading. I loved listening to his calls and commentary during the day and the tradersaudio website has a lot of information about current news and terminology, which you may want to look at before listening.
Why must someone or something be blamed for the market correction we are having? Is there something wrong with a correction? Sure, they got rid of the uptick rule a while ago, so we all knew that. And we already know that can speed up some downside moves. They were pretty stupid to get rid of the rule in the first place. But, I’ve been accumulating inverse ETFs, puts on the indexes and talking about it in the blog for some time now. So I’m a criminal now because I made money in the 10-minute crash of 2010? WTF? I warned you.
By now you have heard of the “fat-finger” error. I didn’t believe it the first time I heard it on CNBC. Then I started seeing it on “civilian” TV. First of all, who would put into production a software package that would allow such a mistake? C’mon programmers, tell me you don’t put in safeguards for human error….I want to make sure I don’t ever hire you. Finally today, we started seeing blogs and news agencies talk about that stupid excuse…“Fat finger” role in selloff likely a myth or this one, Fat Finger Error?
Today was a bit more worrisome than yesterday for me. I had cashed out all my short positions so I couldn’t really take advantage of the continuing down move. And, as I said yesterday, I was looking for a bounce today. The VIX made another big up move and this time, stayed above the 40 mark. OK, volatility is back!
I’ve also noticed that there are more and more references to the week before the ’87 crash (they must read my blog ). I do think it will be this weekend’s news that governs Mondays market….will there be a resolution, a good resolution to the Greek tradgedy? Will there be a resolution to the U.K elections? Will they cap the oil spill? Or do we follow the 1987 history book?
We live in interesting times 
I thought it incredible that the NYSE A/D volume at the low of the day was negative 51:1, yes, -51 to 1. Can’t remember ever seeing that before!
And a quote today from Don Worden at Worden.com, the publishers of Telechart, Stockfinder and FreeStockCharts.com:
The market has to prove itself before a bear can advance into a bull market once again. It can only prove itself by going up and down a number of times until it becomes clear that it has the strength to go on to better things. It does this by providing comparisons with preceding trends in the opposite direction.
So just remember, when all this bullsh!t is done, we’re going up!
Just another day trading the markets. . . . NOT A lot of margin calls taking place tonight. I think I feel sorry for a lot a “retail” traders who just happened to start to get back into the market this week or last. They may have got wiped out today. And do you think traders had stops placed based on a break of 10,000 on the Dow? Well, you saw what happened…the Dow broke 10K and a selling frenzy took place…in minutes. 
The S&P broke through 1150 support at January highs then blew through 1100 or last October’s highs and then almosy made it to February’s low…but not quite. And just as quickly, no more quickly, the markets recovered!
Call option buyers were destroyed today and we still have two weeks until opex. I still think more selling will occur because an intraday 10% move just can’t occur without casualties and hedge fund liquidation. Like I said, a lot of margin calls tonite! Look for a gap down tomorrow morning as a lot of selling takes place, but then a turnaround fairly quickly as traders realize it’s a buying bonanza out there.
So was it a fat finger error? A computer error? Or just all that good news out there? Funny how all the TV stations had Greek riots showing as the market went down. Jim Chanos speaking on CNBC said, the US faces the same issues as Greece…. Too many promises that can never be paid. And then other talking heads on TV said if Germany passes Greek bailout we may see a euro recovery, but if it doesn’t pass, all hell will break loose.
Does anybody remember the week before the 1987 crash? Looking a lot like this week….as the week went down going into Friday and then BANG! Monday crash? Amazing how we are still above February’s lows. Some more amazing facts for today:
Largest intraday point drop ever
Largest Intraday Dow swing ever
Largest VIX move in one day
Largest drop in PG stock ever
I’d be interesting in anybody that was watching all this at their computer today. How did you keep your sanity? Did you blow your account? Did you make money? Happy Trading!
Sometimes, entranced by the screens, watching equities, options and futures change colors, charts moving in a wave, and indicators pointing in every direction, I just have to scream....
