Market Overview

Late-Day Flash Crashes Rock Tuesday's Close

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Joel Elconin and Dennis Dick discussed on Wednesday's Benzinga's #PreMarket Prep the broad swath of mini-flash crashes that hit before Tuesday's close.

After the 3:40 p.m. time period, roughly 20 different stocks were hit with mini-flash crashes. The movements ranged from seven to eight percent and as high as ten percent in one second.

The trades were most likely an erroneous push of the Market Order button, as opposed to the Market On Close button. These types of crashes happen when the liquidity isn't in the book, which is something high-frequency trading (HFT) intermediaries like to highlight they provide. Had this been the past, a floor specialist would go "1-up" and offer the participant the opportunity to verify the order.

In today's trading world, instantaneous order filling and the buffer of a human specialist is now gone.

Related: How To Climb The Market's 'Wall Of Worry' Safely

This was almost assuredly human error and thanks to the automated system in today's trading world, these errors manifest in the market place instantly and must be dealt with accordingly. Placing "fishing-orders" in stocks you own, which anticipate these types of moves, may offer an opportunity to decrease your cost average. However, anticipating these moves and taking advantage of them is nearly impossible.

Elsewhere, Fossil (NASDAQ: FOSL) had a great beat that was ignored, as the company issued weak second quarter guidance forcing traders to sell the stock Wednesday morning in the pre-market, down more than $7.00.

Yahoo (NASDAQ: YHOO) announced it's buying Blink, a competitor to Snapchat. Going back to the most recent earnings date, Yahoo jumped over $37 which offered alert traders three great opportunities to fade. Any moves above $37 on this Blink news may offer a great fade.

Cisco (NASDAQ: CSCO) reports Wednesday night and is flat in the pre-market.

Check out the video below for a recap of Wednesday morning's trading ideas:

Posted-In: Benzinga PreMarket Prep Dennis Dick flash crash HFT high-frequency trading Joel ElconinEarnings Pre-Market Outlook Best of Benzinga

 

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