Fat fingers were to blame but in truth the whole escapade was orchestrated by the powers that be because the market was ready to roll over, as it is now.
With the liquidity pump and infused rally now over for now, time to put on the hard hats!!!
Will the flash crash of May 2010
Started by
fluid
, Apr 04 2012 07:17 AM
1 reply to this topic
#2
arbman
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- Traders-Talk User
- 19,504 posts
Quant
Posted 04 April 2012 - 11:11 PM
The flash crash was triggered by the collapse of BP in 2010, because the leadership was in energy while the central banks were trying to support the market after a long run up with USD leadership. The collapse of the energy leadership was not replaced by the growth and the credit indices and breadth everywhere (bonds and stocks) were lagging for weeks. The foundation of the market was completely eroded. How different is it right now? Very different. Although the asset prices are being supported by the central banks again, we are at the middle of another medium term (1.5-2 years) credit expansion cycle due to the ECB and Fed's collective efforts. We are roughly 6 months away from another crash setup or next October or so, 70 week cycle low is due around next January-February. I bet though the next sharp decline will come from a significantly higher level...
