Flash Crash; What Are They & When Will The Next One Strike

Flash Crash

Editor: Vladimir Bajic | Tactical Investor

Flash Crash

Before we get to the article at hand many might ask why we cover political and health issues when our main focus in the stock markets and the financial arena.   Identifying the problem is over 80% of the solution and this is why most people don’t know what to do because they don’t really understand the problem. 

Mass psychology is a very powerful tool and if employed correctly can help you spot the grotesque levels of manipulation the masses are subjected to. We strongly suggest that you view or read or view Plato’s allegory of the cave. The top player’s agenda today is to manipulate the masses as illustrated by the fake stories the media is pushing out about  Stock Market Crash 2017 and yet the Market as we stated all along continues to trend higher.

This Bull started off as the most hated bull market in history, and it is now metamorphosing into the most insane of all Bull Markets. By any measure, this Market needs to let out some steam as it is trading in the extreme of the extremely overbought ranges. Historically, the crowd is almost always in the bullish camp at this stage of the game, but that does not appear to be the case. In fact, what stands out is that the masses are as anxious as ever, and yet the markets are trading close to their highs. Stock Market Trends-Is the Stock Market Heading For a Crash?

 

Flash Crash: What’s Is It?

According to Wikipedia:

A flash crash is a very rapid, deep, and volatile fall in security prices occurring within an extremely short time period. A flash crash frequently stems from trades executed by black-box trading, combined with high-frequency trading, whose speed and interconnectedness can result in the loss and recovery of billions of dollars in a matter of minutes and seconds.

This type of event occurred on May 6, 2010. A $4.1 billion trade on the New York Stock Exchange (NYSE) resulted in a loss to the Dow Jones Industrial Average of over 1,000 points and then recouped most of its value,  in about fifteen minutes. The mechanism causing the event has been heavily researched and is in dispute. On April 21, 2015, the U.S. Department of Justice laid “22 criminal counts, including fraud and market manipulation” against Navinder Singh Sarao, a trader. Among the charges included was the use of spoofing algorithms.

2017 Ethereum Flash Cras

On June 22, 2017, the price of Ethereum, the second-largest digital cryptocurrency, dropped from more than $300 to as low as $0.10 in minutes at GDAX exchange. Suspected for market manipulation or an account takeover at first, a later investigation by GDAX claimed no indication of wrongdoing. The crash was triggered by a multimillion-dollar selling order which brought the price down, from $317.81 to $224.48, and caused the following flood of 800 stop-loss and margin funding liquidation orders, crashing the market.

Flash Crash of 2015

Monday, August 24, 2015:

This date is embossed on many trader’s memories. The S&P 500 opened at 1965.15 and within minutes fell to a low of 1867.01, a 5% decline. Intraday the market gained back most of the loss, but toward the close of trading stocks fell again, ending the day 3.66% below the open. The S&P 500 is tracked by the SPDR S&P 500 (SPY) ETF.

Wednesday, March 18, 2015:

This flash crash affected traders who were trading the US dollar, which fell more than 3% in under four minutes according to Nanex. However, most of the loss was erased in the next few minutes. For EUR FX (6E) futures, which are based on the EUR/USD exchange rate—it was the largest price swing within five minutes in the last four years. The Euro can also be traded via the CurrencyShares Euro (FXE) ETF. Investopedia

Tactical Investor Take on The Flash Crash Debate Aug 2019

Forget about the silly “flash crash” term and focus on the “opportunity factor” Every stock market flash crash to date proved to be a buying opportunity. If you take a look at the mass sentiment right now, a flash crash would make for a monumental buying opportunity (look at the two images below).

Market Sentiment is far from bullish

Take a look at the gauges below and it immediately becomes obvious that the only ones that are scared are the ones that historically fare the worst. Anyone with the mass mindset falls under that category. In other words, lemmings will always be lemmings and their only function when it comes to the markets is to be used as cannon fodder.

 

 

The long term outlook for the Dow and the overall markets remain unchanged.  On the monthly charts, the Dow is still trading in the oversold ranges, so despite the gnashing of teeth, this current pullback has to be viewed through a bullish lens.

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