what just happened???

I agree with Cutten.

Important things to note:

* Risk adverse trades (including but not limited to declining equities) were on before 2pm ET

* Then to paraphrase Cutten, the sellers became even more aggressive, and the buyers either reduced their bids or pulled them completely

* The fat finger stuff may have happened or not, but it's not really relevant, apart from making a good story for the evening news.

Also a good summary of yesterday's action in this article

http://www.zerohedge.com/article/dissecting-crash



Quote from Ghost of Cutten:

A mistake in every single market that was open then? The 700 pip spike in the Yen was a mistake? Government bonds rallying huge was mistaken trades?

This was simply a mini October 1987 rerun. Too many stops, not enough buyers, the only difference was that HFT exaggerated the speed of the decline.

Basically the problem was no trading curbs or human intervention once the market became disorderly. IMO the result will be regulators introduce price limits and temporary trading curbs once they get triggered e.g. 30 mins stop trading once a security is down 20%+, let people get their bearings, then do a pre-open and re-open just like the normal start of trading. That way everyone has time to react, instead of seeing a stock go from down 10% to trading at 0.01 in a millisecond.
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