US stock market, currencies flash-crashed #BlackMonday

Monday 24 August 2015

This date will go into history books for financial students. US stock market crashed, halted, un-halted and then Dow Futures went on to move over 4500 points intraday.

From Reuters UK,

S&P 500 INDEX FUTURES AND DOW JONES FUTURES HIT CIRCUIT BREAKER, HALTED

 

From Zerohedge,

This is not normal… Dow futures moved over 4,500 points intraday today!!!

DJ30 5-minute chart of 'Black Monday'

DJ30 5-minute chart of ‘Black Monday’

  1. This is NOT a sign of strength. Market is under a lot of stress.
  2. Bears looking at any retracement/resistance to sell.
  3. It does not mean that the market will not go higher. That long tail itself is a selling climax that could signal a temporary turning point because of short covering, bargain hunting.
  4. Lastly this ugly incident highlighted something else↓. China is not the only country that will go after/villanize short sellers when the market tanks. China is merely using a global playbook that everyone else is following. In the story’ What you need to know about stock market crashes‘ I wrote,

6. Short sellers beware. Anyone who think they can make money on the downside should take note: while authorities have no problem with irrational, exuberant buyers, they will always villianize sellers. Short selling will certainly be banned.

Short selling restriction arrests US flash crash

Message from broker: short selling restriction comes into force

And lastly picture from trading volume says a thousand words.

You know what this means.

 

Action in currencies

To complete the picture of what a night it was, here is a chart of AUDNZD that captured the story unfolding in currencies at the same time. Intraday low to high 710 pips. From open to close, round trip 1292 pips. That’s how fortunes are won or lost.

AUDNZD 5-minute chart showing concurrent action in currencies #blackmonday

AUDNZD 5-minute chart showing concurrent action in currencies #blackmonday

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Soh Tiong Hum is Director of TerraSeeds Market Technician Pte Ltd. TerraSeeds is a trading educator in Singapore since 2005. Soh Tiong Hum is a member and regular speaker at Technical Analysts Society Singapore events and has a bi-monthly lunch time event at IG Singapore on forex and stock markets. He is an avid blogger on technical analysis topics; his Twitter account @sohtionghum was ranked #23 out of The Top 70 Twitter Accounts To Follow In 2015 by MahiFX. Come find Tiong Hum on Google+
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