Jesse's Café Américain Sun 2010-05-09 09:08 EDT
PLUNGE! 1987 Style Sudden Drop in US Stocks Driven by Program Trading and a Ponzi Market Structure
US equities were gripped by panic selling as the Dow plunged almost 1,000 points driven by a cascade of 100 share high frequency program trading, estimated to have been about 80% of volume. Gold rocketed higher to $1,210...This is highly reminiscent of the 1987 crash driven by a flawed market structure based on automated trading and bad theories. 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...
1987 Style Sudden Drop; Jesse's Café Américain; plunge; Ponzi Market Structure; program-trading; Stocks driven.