Do You Really Know What The Flash Crash Was About ?

[bgp]

listen close and open your eyes. the fed and treasury were testing the market to see if it could hold up by itself. it couldn't and what preceded was the drop.
bp

 

[Thalamus09]

The market has always been at risk for this. Market Makers were supposedly the back stop before the electronic exchanges but they were always cowards too, and bailed when the bullets started flying. The only entity to provide a real backstop is the government and always will be. Who do you think purchased the market en mass at Dow -1,000 during the flash crash? It sure wasn't a non-government entity or private individuals. It was many of the large banks acting as surrogates for the Fed who has unlimited manipulation power, and the only entity with an "Other" column on their balance sheet that can hide the purchases.

 

[rallydog]

You two should adjust your tin foil hats.

 

[bgp]

yes, good point thalamuss.

bp

 

[bgp]

rallydogy ? you must be one of the 12 yr. olds on elite ?

bp

 

[Scataphagos]

Quote from bgp:

listen close and open your eyes. the fed and treasury were testing the market to see if it could hold up by itself. it couldn't and what preceded was the drop.
bp

Doubt it. Logically and more likely, and HFT overshoot/accident.

 

[dinn13]

Quote from rallydog:

You two should adjust your tin foil hats.

I don't think adjusting will work, the problem they are probably facing is: http://en.wikipedia.org/wiki/Dunning–Kruger_effect

"people reach erroneous conclusions and make unfortunate choices but their incompetence robs them of the metacognitive ability to realize it."

 

[bgp]

lets face it . right after the big drop the media and trade were witch hunting. we do know that the fed. has been facilitating trade since 2009

bp

 

[Blotto]

Quote from Thalamus09:

The market has always been at risk for this. Market Makers were supposedly the back stop before the electronic exchanges but they were always cowards too, and bailed when the bullets started flying. The only entity to provide a real backstop is the government and always will be. Who do you think purchased the market en mass at Dow -1,000 during the flash crash? It sure wasn't a non-government entity or private individuals. It was many of the large banks acting as surrogates for the Fed who has unlimited manipulation power, and the only entity with an "Other" column on their balance sheet that can hide the purchases.

No, it was short covering and reaccumulation. The next day, Friday, was also accumulation. What followed was a short squeeze, which lasted three days before the market was allowed to drop owing to background weakness which has been apparent since late April.

Removing the backstop of short covering can be very dangerous in these conditions. Notice the sequence of events in fall 2008, with shorts being forced to close out positions in financials, and when the inevitable collapse came there was no bid for 200 points. Who do you think was selling during the short covering squeeze sparked by the legislation? Longs to close.