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"The entire stock market rally which we have seen this year off the February lows resembles a low volume Ponzi scheme, and formed a huge air pocket under prices
by startuprules 16y ago
"The entire stock market rally which we have seen this year off the February lows resembles a low volume Ponzi scheme, and formed a huge air pocket under prices.
This US equity rally was driven by technically oriented buying from the Banks and the hedge funds. There was and still is a lack of legitimate institutional buying at these price levels. This was machine driven speculation enabled by the lack of reform in a system riddled with corruption, from the bottom to the top."
Translation: there's no real buyers in the market at the current price, so when panic came, there were no buys to prop up the free falling
link: http://jessescrossroadscafe.blogspot.com/2010/05/plunge-1000-point-drop-on-dow-driven-by.html http://jessescrossroadscafe.blogspot.com/2010/05/plunge-1000...
- cynicalkane 16y agoIf there were no buys to prop up the free falling, why did the markets rebound almost instantly?
- startuprules 16y agogovernment intervention via JPM trading desks and trades cancellation from the exchanges
- nostrademons 16y agoDo you have any evidence whatsoever for that? Or is it just a case of "when something I can't explain happens, it's because the government did it"?
- blantonl 16y agoBecause liquidity returned to the market. The problem was the NYSE paused trading for many of the stocks in question for 90 secs because of heavy sell pressure, driving those trades to other markets which had little to no liquidity for a few minutes (and are solely electronic). Compound that with a possible trading error, and HFT algorithms, and you had a short period of time where there were no bids for those stocks on those electronic markets. When liquidity for those stocks returned to the market, the proper forces brought the stocks back to their bid/ask prices in a liquid market.