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Possible Scenario for Thursday`s Market Crash

Posted by Eric LeRiche | May 8, 2010 .

Down 1,000 points at its worst, the Dow recovered to a 350-point loss on the day.

And all because “M” is just a hair too close to “B” on a standard American keyboard, we’re told.

The story goes that a trader at a major firm perhaps mistyped a trade as “billions” rather than “millions.” Word is the trader works (worked?) for Citi, which Citi promptly denied.

But on what stock did the fatal trade occur? Because there was more than one crazy drop:

* The accounting firm Accenture plunged briefly from $40 to $0.01
* IWD, an ETF tracking the Russell 1000, fell off a cliff from $61 to $0.09
* Procter & Gamble didn’t take nearly as big a fall — dropping to 37%, to $39 — but it’s a component of the Dow Jones industrials.

That was enough to trigger a wave of automated sell orders, pushing the Dow below 10,000. And once the 10,000 line was crossed, then a wave of automated buys kicked in.

Fun times, eh? Hope your retirement plans survived intact!

Eric$

Posted under Financial Markets, Investing Tips, Investor Rules, Stock Market Investing, Stock market news | Comment Like this article? Subscribe to our RSS feed

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