I understand that computer trading could have easily caused today's crash of 10% but someone please tell me what caused such a RAPID recovery? All I can think is massive intervention. I can't see any competing trading algorithms all turning over to buy so suddenly to drive things right back up, and I can't imagine so many independent traders having the guts to catch a falling knife and drive the market straight back up.
This is exactly what I have thought all day long. Noboby with real money on line has a "pair" that big to absorb all that selling that fast. I thought I had seen everything until today.
the same programs that sold, bought back in after seeing the oppo that was programmed in front of them if...then...statements
I have been thinking about this fact as well, and my answer gets to what I think actually caused the downturn. The shorts were pushing it down, and it kept putting in lower lows, and it was so consistent, they never had to cover, this encouraged more shorting, and I think some huge size was put on with no fear as it was a safe one-sided market, so the shorts loaded up like we have never seen before, and then key techincal levels were hit, causing forced liquidations, triggering more market sell orders, and the only explanation for the quick buyback was the same shorts covering trying to lock in their gains once the damn broke. This all comes down to probably the biggest short-term short size ever being put on a market, playing for the break, it broke , and subsequent covering........and the reason they didn`t stay short is obvious, who could have imagined such a break, you obviously take profits on that break, it is a once in a lifetime break, and the real pressure was in getting out with as much potential profit as possible when so many shorts were covering probably at market.
A lot of people had the guts to buy it because they know that "worries" of tourist destinations defaulting, and cnbc video of protesters getting beaten across the world, are not enough to cause a 1000 point drop in the dow. lol I remember the bounces off the legitimate plunges in 08-09, you'd have the long term holders swallowing up everything, because they knew even if the market kept tanking the U.S would still print itself out of the hole eventually. And it did. With the dollar as strong as it is now, you'd think all that never happened. lol
In The case of P&G, as soon as the NYSE re-opened trading, the prices were back in line. The absurd transactions were on no volume - there was nothing of consequence to unwind. In the case of assorted futures and what not, the same guys who hit the sell button bought to cover. Depending on who was faster, some won and some lost.
In the S&P pits, there were no bidders as the market melted down. It was pure panic and one of disbelief. Paper kept offering but the bidders wouldn't show up. It was so thin all the way down to the bottom at 1065's. Then, it got so nuts. The spread widened to 12 handles which is unheard of. One trader even experienced heart problems. Some of the bigger players got creamed.