Saturday, June 10, 2017

AMZN Amazon and JWN Nordstrom Daily Charts; Amazon Flash Crash; Nordstrom Flash Spike

The computer gremlins were wreaking havoc in the stock market yesterday, Friday, 6/9/17. Citigroup and Amazon flash crash in the afternoon while Nordstrom flash spikes. The major stock indexes print new all-time highs early in the Friday session and then roll over to the downside from 11 AM on. As trading  proceeds towards 3 PM, equities are falling like a rock.

Traders that were drinking Fed wine and buying stocks without a care in the world after the opening bell are now staggering around in a state of confusion wondering why equities are falling off a cliff and beginning to accelerate lower.

At 2:38 PM EST, Citigroup flash crashes from 64.13 to 63.50, -1%, in seconds and then immediately recovers.

At 2:50 PM EST, Amazon flash crashes. Billions in market cap disappear in seconds. AMZN is at 978.30 at 2:48 PM. One minute later the print is 962.00 then whoosh. AMZN collapses to 927.00 a -5.2% drop in two minutes. As with most flash crashes, price immediately recovers. At 2:52 PM, AMZN recovers to 970. At 2:57 PM, price is up to 975.00. At 3:16 PM, AMZN finally fully recovers from the flash crash back to the 978.30 level. AMZN finishes the day down 32 points, a -3.2% hit, to 978.31 interestingly settling exactly on the price from where the flash crash occurred.

As usual, the exchanges remain quiet about the event. Traders brush it off as business as usual. Computer algorithms are blamed. Obviously, if a flash crash can occur in Amazon, it can occur in any individual stock or index. Perhaps the Amazon flash crash is another warning that more and larger flash crash events are on the come. One of these days, the flash crashes are not going to recover.

At 2:56 PM EST, Nordstrom’s flash spikes. JWN rocket launches from 46.00 to 47.52, +3.3%, in seconds. Price quickly flash crashes from 47.52 back down to 46.20 within the same one minute of time. JWN then proceeds higher and at 3:24 PM overtakes the 47.52 flash spike high. JWN finishes the day up +5.666% to 47.16. The flash crash in Amazon and corresponding flash spike in Nordstrom’s suggest that the computer algorithms are at fault. Money is flowing out of overpriced tech stocks and into retail stocks.

US stocks end the day mixed after falling off a cliff from 11 AM. Equities printed the lows for the day around 2:50 PM EST. This corresponds to the end of the fifth 65-minute segment of the session and the start of the sixth and final segment of the trading day from 2:55 PM to 4:00 PM.

The computer algorithm trading programs are keying off this 65-minute time structure for the regular trading session. Each trading day is split into six 65-minute segments; 9:30 AM (opening bell) to 10:35 AM, 10:35 AM to 11:40 AM, 11:40 AM to 12:45 PM, 12:45 PM to 1:50 PM, 1:50 PM to 2:55 PM and 2:55 PM to 4:00 PM (closing bell). Note that the flash spikes and flash crashes occur today at the end of the fifth segment. Algorithms may be programmed to take action during the final minutes of these various segments throughout the day.

Keystone's publication Flash Crashes, Fat Fingers and Computer Glitches, Oh My!: A Summary of Major System Outages at Global Exchanges 2010 through 2016 by K E Stone is available from Amazon for a buck 99. This year's flash crashes and flash spikes are added to the 2010-2017 edition that will be published by Amazon in January 2018. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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