What led up to the Dow’s 1000 Point Drop?
Posted on May 6, 2010 by trader21 in *TODAY'S STOCK SETUPS, GLOBAL CHART ANALYSIS
To read this entire article with charts click here
This market sell off was for real. Don’t let them convince you it was a trading error or a “fat fingered trader” typing in the wrong number of shares. Don’t let them convince you the Nasdaq system had a computer glitch, this too isn’t the truth. There were massive sell orders followed by panic selling. All the liquidity was sucked out of the market and we ran out of buyers after filling so many sell orders so quickly. The most likely culprit was the unwinding of currency carry trades. We will have a big report later but for now we leave you with these charts. If you notice these currency sell offs happened well before the supposed erroneous trades and when these currency pair began to unwind, the assets that were bought with the cheap borrowed yen were used to purchase Us Equities, Debt etc. When a currency breaks like they did today all these massive Quant funds are forced to liquidate all at once.
Click to enlarge charts
EUR/JPY These are massive moves and just normally don’t happen
These selloffs happened before the market dropped 1000 points and is what we believe led up to a massive influx of sell orders
We have been closing out positions since April 15 and have helped our readers miss most of this sell off. We think buying this dip today could possibly pose a huge risk and are staying out of the way for now….More later
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Thanks
Brett Marsh
www.globalchartanalysis.com
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