Trading Halt Blows Investors Away
On February 4th, 2015 I talked about how changes in market trends can rip your face off. Well, today is that smack in the face. Before the market opened to most retail investors, the E mini-futures were halted after falling over 130 points.
The SEC created circuit breakers many years ago in an attempt to avoid calamity in the stock market. The circuit breaker rules force markets that fall too far, too fast, to halt trading. You can find the halting schedules at this SEC link SEC Circuit Breaker, or you can view the circuity breaker schedule I created below.
Global financial markets have been extremely volatile since the futures market opened for trading Sunday at 6 p.m. The S&P futures reached an intra-day low this morning 0f 1,831 before the opening bell sounded. Will we see the S&P 500 halt trading again today?
Is it really that bad?
At the moment it’s pretty bad, and if the Asian markets are any indication of the potential pain we could feel, it could get a lot worse in a hurry. If history repeats itself, the government should be making an announcement at any moment. They will try to step in and save the day to make sure nobody loses and everyone receives their participation ribbon. This time however, the government may not have enough ammo. The Chinese government tried save their reeling equity markets recently but Shanghai investors, who were up nearly 60% on the year watched as all of their gains were wiped out in a few short months.
As if the market chaos wasn’t bad enough, CNBC and USA Today reported that TD Ameritrade and Scottrade customers were having problems accessing their online accounts. According to the article, the firm told clients to call an 800 number to place trades while they work on the issue. Imagine waking up to the markets we saw today only to find out you can’t place trades on your account.
Intra Blog Update
It seems my fingers can’t move quick enough this morning. I’ve typed, deleted, re-typed, and deleted again as the S&P 500 whipsawed from an opening level of 1970, to a low of 1831, to the levels we see now around 1916. Forgive the poor grammar, the bad flow, and everything else that wasn’t great about this article. Pay attention to the underlying theme, buckle your seat-belts, and hang on for the ride.