Thursday meltdown

Just a brief comment on Thursday's price action.

It appears panic (or maybe "reality" might be a more appropriate term) may be setting into the markets.

Click on all charts to enlarge:


S & P 500 Index 1 minute chart:




Dow Jones Industrial Average 1 minute chart:




There is a lot of speculation as to what caused the crash and subsequent recovery in the markets (1000 point move on the Dow; down 481 points in 6 minutes and then back up 502 points in 10 minutes).

There is talk of "finger trouble" at a major brokerage firm whereby a trader incorrectly set an out sized sell order on Proctor and Gamble shares (NYSE: PG). This led to a sharp decline that was recognized by High Frequency Trading programs (computer based prop trading by the major brokerage houses). These in turn kicking in and began taking out sell stops.

Whether this was the case or not, the markets are very fragile now (mostly due to the European debt situation and the Euro decline). This may turn out to be a great buying opportunity or it could be the start of a major move to new lows. It is still too early to tell.

I plan on sitting on my hands today and watch the action. The technical picture will become more clear after today's market close.

I will have an updated blog post on Saturday or Sunday.

My positions remain unchanged.