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
This is not normal… Dow futures moved over 4,500 points intraday today!!!
- This is NOT a sign of strength. Market is under a lot of stress.
- Bears looking at any retracement/resistance to sell.
- 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.
- 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.
And lastly picture from trading volume says a thousand words.
You know what this means.
Oh, and today’s US Volume Crashed (to the upside) on the decline: pic.twitter.com/4uhe4oka2W
— Keith McCullough (@KeithMcCullough) August 25, 2015
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.