sudden market behaviour

lionfly

Junior member
10 0
Yesterday on US 11am, the Dow Jones dropped 100 points within a blink, just a flash, the number changed from more than 8200 to 8080.

I wonder if the index is calcuated based on the 30 companies prices, will the selling pressue push the index down 100 points within 0.5 second?

Where is the selling pressure coming from? huge fund manager? or millions of normal stock holders sending selling orders at the same time?
 

foredog

Experienced member
1,879 313
Yes, if you've got a program trade loaded that will hit the bids in X size in all 30 stocks.

Now imagine about 20 different firms doing that at the same time
 

Jack o'Clubs

Experienced member
1,554 342
very fast action like that is usually driven by futures selling, and then the arbs/program trades dump stocks to remain in synch.
 

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