Friday, May 24, 2013
Utilities Sector Flash Crashes in UTIL, AEP and NEE
The markets continue to print flash crashes with frequency. On Thursday, 5/23/13, after the opening bell at 9:30 AM EST, a data feed problem and excessive sell orders are blamed for flash crashes in the utilities AEP, American Electric Power, and NEE, NextEra Energy, as well as the broad UTIL utility index. UTIL collapsed through the 200-day MA to 445 from 507, a -12 % drop, but recovered in about fifteen minutes time. AEP fell from 49 to 23, -53%. NEE fell from 79 to 35, -56%.
The surprising aspect is that the stock exchange says the trades will stand. Utilities are Ma and Pa stocks. Imagine the surprise and horror when gray-haired Dad and blue-haired Mom see their safe haven stocks collapse. Moreover, those with market orders are burned severely. If you placed an unprotected order in AEP or NEE to sell you just lost -50% of your money courtesy of the largest casino on earth. The flash crashes are expected to continue moving forward. Perhaps another 5/6/10 Flash Crash event is on the table?