What exactly happened to the stock market today?

[Free Trade is managed by the invisible hand.]

http://www.calculatedriskblog.com/2010/05/market-update.html

There are two rumors: The first is that there was a trading error (fat finger of a E-mini SP future order), the second is that Euro banks are having a liquidity problem of some sort. Neither is confirmed.

Click on graph for larger image in new window.

The first graph shows the S&P 500 since 1990 (this excludes dividends).

The dashed line is the closing price today. The S&P 500 was first at this level in April 1998; over 12 years ago.


The second graph is from Doug Short of dshort.com (financial planner): "Four Bad Bears".

Note that the Great Depression crash is based on the DOW; the three others are for the S&P 500.

[Sam Spade]

It went down.  A good bit.

[??????????]

http://www.calculatedriskblog.com/2010/05/market-update.html

There are two rumors: The first is that there was a trading error (fat finger of a E-mini SP future order), the second is that Euro banks are having a liquidity problem of some sort. Neither is confirmed.

Click on graph for larger image in new window.

The first graph shows the S&P 500 since 1990 (this excludes dividends).

The dashed line is the closing price today. The S&P 500 was first at this level in April 1998; over 12 years ago.


The second graph is from Doug Short of dshort.com (financial planner): "Four Bad Bears".

Note that the Great Depression crash is based on the DOW; the three others are for the S&P 500.

The fat finger couldn't explain the entirety of the crash.

[J. J.]

"Greece is the word ... ."

[angus]

It went down.  A good bit.

pretty much my analysis as well, although I like JJ's quip much better.  wish I'd thought of it first.

I have lost about $150 per day for the last week on GE, and about 100 a day on the only other stock I'm holding, which is TRP.  Bought that on a tip from Neil Cavuto.  Yeah, I swore off FOX's financial advice about four years ago on this forum, but he seems to make so much sense when he's talking. 

As far as I can tell, everyone's spooked by uncertainty.  Gold's up.  1210 per troy ounce as I type this, evidence that folks who just like to trade are looking for safe havens.  Investors don't seem scared, though.  Crude oil is hovering around 75--the convenience store about six blocks from my house has been stuck at $2.749 for about a week now, unchanging, which is a bit surprising.  Usually they track pretty closely with oil, except during bad summers, when the national average goes over three, but it stays low because the state requires a hefty percentage of ethanol in every gallon.  Yeah, I'm with you on the Farm Subsidies, if you're going to tell me the prop is bad economically, and the monoculture's bad for the soil and all that.  Tell Grassley too, while you're at it.  He doesn't listen to me, apparently--But JJ's right.  The odds that Greece will default aren't yet zero in most investors' minds.  And Europe's debt crisis, which raised questions about the pace of the global economic recovery, isn't really limited to Greece.  And UK's massive debt, which isn't as dire as Greece's situation since they're a rich country, unlike Greece, still seems to be unresolved since the average investor will interpret the Conservative Party's failure to win a majority in the parliament a sign that the people in Great Britain are uncertain about how best to settle that.  (Wonder when folks will start to grow uneasy about our own massive national debt?)  Apparently those sorts of worries trumped a US dept of Labor report showing that job growth in April was the best that it has been in over four years.  I guess that's the only incongruency.  In congruent because normally unemployment rate is normally a lagging indicator. 

I have mixed feelings.  Being an investor and not a trader, and not being rich enough to lose too much anyway, I don't take the one- to two-percent losses to heart.  So long as the IRA doesn't crash.  And the rising dollar really doesn't bother me.  I'm not an exporter myself, and none of my investments involve exporters except some Canadian exporters, and Canada's not tracking exactly with the dollar right now anyway, and we usually leave the country for about a month of every year, and a rising dollars means I can buy more Pesos or Soles or Yen or Pounds anyway, so I generally welcome the news.  And the Fed's policy, beginning in about 2002, of a stretchy dollar didn't have the intended effect, so it's not bad to see the dollar back at just over 1.5 per pound sterling, imho.  Seems a decent place.  Of course, Obama's kicking himself for putting all his eggs in the export basket, but then he has many things to kick himself for so the bruises on his ass can't all be blamed on that. 

It's probably temporary, with the markets.  No one really wants to go long over the weekend with the Greece situation as it is.  A weekend's an eternity for traders.  Be an investor, not a trader.  Times just like this are buying times, right?  Lose money on GE?  No problem, just buy more GE.

[Bo]

Irrational exuberance, the other way around.

[angus]

Irrational exuberance, the other way around.

rational inuberance, then?

[angus]

Automated sell-off by computer programs.  At least that's the word on Market Watch.  Lots of software out there, you know.  I've never used any of it, but apparently the parameters are P/E ratio, value of the dollar, volume, beta value, etc.  You queue a stock you like, and when the conditions are just right, the sale is executed.  For a small fee.  Apparently with the dollar creeping up, and the volumes high, the executions were triggered.  Then it becomes self-reinforcing.  Sales beget sales.  At least that's what some analysists.

I still think Greece is the word, is the word, is the word...

[opebo]

And the rising dollar really doesn't bother me... a rising dollars means I can buy more Pesos or Soles or Yen or Pounds anyway, so I generally welcome the news.

The dollar hasn't risen a bit against the Thai Baht, even in spite of all the terrible political troubles in Thailand.  In fact as far as I can tell from the yahoo currencies thingy, the dollar has fallen a bit these last few days against most Asian currencies. 

[phk]

And the rising dollar really doesn't bother me... a rising dollars means I can buy more Pesos or Soles or Yen or Pounds anyway, so I generally welcome the news.

The dollar hasn't risen a bit against the Thai Baht, even in spite of all the terrible political troubles in Thailand.  In fact as far as I can tell from the yahoo currencies thingy, the dollar has fallen a bit these last few days against most Asian currencies. 

Its up ticking against the Euro and GBP.

[angus]

And the rising dollar really doesn't bother me... a rising dollars means I can buy more Pesos or Soles or Yen or Pounds anyway, so I generally welcome the news.

The dollar hasn't risen a bit against the Thai Baht, even in spite of all the terrible political troubles in Thailand.  In fact as far as I can tell from the yahoo currencies thingy, the dollar has fallen a bit these last few days against most Asian currencies.  

Its up ticking against the Euro and GBP.

But opebo makes an interesting point.  This is a phenomenon I"d noticed a few months ago but thought no one else did, till I read an article in WaPo a couple of weeks ago, or maybe it was CBS Market Watch.  Doesn't matter.  At least someone else noticed it.

When people say the dollar is "rising" or "falling" clearly they mean with respect to the pound, the yen, or the European currency unit.  But for some time I paid more attention to the Peso, the Quetzal, the Lempira, and various latinamerican and caribbean curriencies, mostly because that's where I hang when I'm not one someone else's time.  And against most developing world currnecies, the dollar (and the pound and the euro and the yen, for that matter), have been falling.  I'd not been paying attention to the Baht, except incidentally in some forums (fora?) where folks talk about travel to Thailand, and then it's usually by accident--apparently the diving is great in both the Andaman Sea and the Gulf of Thailand, and being a diver and a geek, I find myself often at the intersection of those two worlds, which means I'm reading and posting about visibiltiy conditions and local economic conditions in places where the diving is good, so Thailand comes up from time--But back to point:  1.48 dollars buys one pound.  Six months ago it took about 1.7 dollars to buy one pound.  Today one dollar buys about 92 Yen.  Six months ago a dollar only bought about 85 Yen.  Six months ago it took 1.52 dollars to buy one euro; today it takes about 1.27 dollars to buy one euro.  That's what I was talking about, since many US politicians are hanging hopes for a US recovery on US exports, although opebo also makes an interesting point about the dollar in a long-term decline against the Baht, however distracting, and it is one which I'd noticed some other people are starting to notice as well. The problem is, how does one invest in Mexico, Thailand, Jamaica, or Nigeria?  With rampant government corruption--yes, there's some of that in the US, the UK, and in Japan, in some form, but not like you find in the developing world--how do you exploit the fact that most developing countries (Brazil, Russia, India, and China if they'd ever divorce themselves from the Dollar, etc.) are seeing their aggregate GDPs and their currencies rise against the developed world?  I wish I knew, because I'd be doing it.  But within the US sphere of influence (dollar, pound, euro, yen), the dollar has definitely been rising, and that does not bode well for the U.S. economic recovery, or at least the ways the central planners in the central planning committee had planned.  Whether that means we oust the Central Planners in favor of Free Marketers this November remains to be seen, but it at least partially explains the recent DJIA decline, I think.