What happened at 3:45est???

Originally posted by Marc to Market
Hmmmm, so are we going to have a gap up tomorrow morning across the boards once people realize the price drop was artificial? I feel bad for the people who got fucked today. Luckily, I only trade POS stocks under a buck.

Marc
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Yeah, me too, only I cap out at 35 cents.
 
You are not alone in your quest to understand the cause of the seemingly endless late afternoon selloff. I did find an article written by Aaron L. Task that appeased my curiosity and seemed to give some validity to some of the rumors out there. If you are still interested try doing a search.

Hope it helps!
 
Originally posted by zxcv1fu
Do they have to buy back to cover?
AMD warned after hours. Tomorrow will be interesting.
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Ya. It seems like a big deal, but it might not be too bad. AMD is down a buck and change after hours, but surprisingly Intel is only down 0.16. According to the news I've been reading, this warning was a long time coming.

I guess we'll see tomorrow ... interesting indeed.
 
I'll come clean...I flooded the market with sell orders at 3:45 because I was bored. Sorry if it caught some of you guys by surprise.:D
 
...NYSE: "As a result of a clerical error at approximately 3:40 p.m. today, Bear Stearns entered orders to sell $4 billion worth of S&P securities. The orders should have been entered as $4 million. All but $622 million of the orders were cancelled prior to execution. The firm has advised the NYSE that the risk from the executed orders has been substantially hedged."...

So original normal position was supposed to be 4 million, but 3 billion 378 million went through., that is 844.5 x normal 4mill position.

How was that substantially hedged? Or was it hedged ahead of time and the "sell" was squaring the position?
Or was it hedged afterwards?

What does "substantially hedged" mean?

Thanks

Josh
 
I'm sure they hedged with the purchase of EFT's or futures in the aftermarket since they are short stocks. They'll unwind it with little risk tomorrow by purchasing back stock and selling the hedge. :D
 
look at MSFT and CSCO this afternoon around 3:40. yes there is a small drop in price, but no worse than at 1:35PM or 3:15PM. GE was potentially the hardest hit, with a real drop, when it had been in a gentle downtrend all day. the drop caused by the "clerical error" (we'll never know for sure) was no more than a drop in the bucket, but i bet it will be displayed on the news as the cause for the whole afternoon selloff, and reason for everyone to go ahead and buy to take advantage of the mistake.
 
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