President of TradersAudio.com Ben Lichtenstein’s breathless order-taking in the S&P 500 pit in Chicago during Thurday’s unusual market decline has become an internet sensation.
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See also BNN
Hat tip R. Cain
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
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Knowing that the vote over the weekend in Greece was really a referendum on Euro membership, a majority of the Greek Parliament said yes to staying. European Finance Ministers meet again on Wednesday to solidify the 2nd bailout package for Greece at the same time hopefully a deal is consummated between Greece and its creditors this week. The Greek 14.5b euro bond that matures on March 20th is up by 2 pts. The optimism that all will be completed and contained AGAIN to Greece has yields lower in Portugal, Spain and Italy. The iTraxx Financial Index is also narrower by...
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May 8th, 2010 at 11:38 am
“Mortimer, get in there and sell.”
May 8th, 2010 at 11:50 am
Is this available for download somewhere?! Would be a great audio file for the iPod!!!
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BR: Yes, click the link that says “Files: MP3, Ogg Vorbis”
May 8th, 2010 at 12:40 pm
Say BR, any plans to switch from flash to HTML5? Using flash to provide access to an audio clip seems a bit much.
Just curious, not looking to defend my partisan roots on this (at least not here).
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BR: I use whatever embed is available
May 8th, 2010 at 12:57 pm
@VennData
I believe you have captured the essence of the moment.
May 8th, 2010 at 1:45 pm
Observations:
1) Is it out of the realm of possibilities that The Markets could be susceptible to overseas hackers? The Chinese can hack the Pentagon, why not the Nasdaq? What about these “black boxes” for quant trading? Is it plausible someone could hack some of these computer based trading ops the hedge funds have and tinker with that stuff as a backdoor to blowing out the Nasdaq/NYSE? I’m not a conspiracy theorist, just wondering if something like that is possible.
2) Can someone break down what he’s talking about early on? He’s yelling about “1053 is too low. That’s a 1000 point Dow move.” That is right before the 1000 point dow move. Was that an order or something? I’m not familiar with pit lingo for orders. What would have clued him in to that kind of movement immediately before it occurred? Did someone feed in some sort of order in anticipation of the plummet? Who was that and why?
3) “Morgan Stanley selling 100,000 at ’70!!!!!”
If this order was for the MS house account and not to fill a client order, that trader should be fired. 2008/2009 taught a lot of lessons on this sort of movement and how to stay calm during it. Not that I was Obi-Wan sending buy orders, but we went sub 10,000 on the DJIA and I took 10% of my cash (all cash since 4/15 except GS) and plowed limit orders in on a few opportunities. I was very late and missed a few things (I ran for PG and missed/almost cried) but I caught a few deals (AAPL at 220, GE at 16ish, CENX at 11) and dumped them the same day. I made chump change because 10% of my cash isn’t very much. My point is, what is a professional trader doing getting scared and selling into a 1000 point drop? Terminable offense. JPM and Merrill apparently were buyers in the 1080s. Goldman is thanking god right now the guy never let off a “Goldman’s plot worked…” hehe.
4) You could smell fear if you were in an office of brokers and CNBC only exacerbated this (except Cramer oddly enough). If you remember 2008/2009 and realize it’s not 2008/2009, you should have gone greedy at some point. Again, stressing I wasn’t very confident myself and only got greedy with a small amount of cash (most of which was my 2010 winnings) but definitely not fearful. Put the TV on mute and tune out everyone else (except the old guys cuz they’ve seen it all and aren’t even phased). See the forest for the trees (get TBP, literally). This is probably one of the most important lessons I’ve learned from TBP during the last 2 years.
May 8th, 2010 at 1:52 pm
This one is the best
http://www.youtube.com/watch?v=ppEJ8r7bQ2o
May 8th, 2010 at 3:00 pm
@mbelardes
1053 = limit down level for the day. He just got that info from someone. No conspiracy theory there.
I don’t see anything suspicious in the order flow. HUGE orders came in from “paper” seller(s) (Ben sadly doesn’t mention who from. May he didn’t know), market makers i.e. “locals” kept spreads wide to protect themselves but still were willing to take the other side of the trade and then JPM, Merill regained sanity, thought the market was ridiculously oversold and kept pushing bids higher.
Obviously, the $15B dollar question is who sold so relentlessly from 1100 to 1060? Was it a mistake? Was it a liquidation? That we don’t know yet.
May 8th, 2010 at 3:11 pm
I was listening it live on Thinkorswim’s Marketcast channel. You have to give it to Ben, he is one great commentator. I had a limit order at 1050 on e-mini but never hit, came down to 1056 and went up.
May 8th, 2010 at 3:21 pm
I can tell you why hacker activity is unlikely. All the direct exchange traffic are closed to the outside world. Even electronic traders in front of monitors are usually sending trades via some custom trade placing system. In fact, at least when I was there a few years ago, nobody used wireless internet on their laptops in the pit.
What’s more, most custom trading systems are not documented at all. for hackers, it’s a maze.
My guess is, retail brokers route all their internet trades to their own ordering system. but there’s not going to be a way to directly send orders from the outside.
May 8th, 2010 at 4:15 pm
@mbelardes
I think Ben said “Morgan Stanley selling 100 Cars at ’70″. A “Car” is old school for contract….literally, a railcar of a commodity.
The audio certainly brings the tension of the tape to life.
In retrospect, there were plenty of ridiculous prices all the way to the bottom. Impossible to know which print is the low in a 90 second free fall unless it is $.01. As Ben says later in the audio, that is the kind of action that blows people out of the market and sometimes, out of everything they own. There are worse fates than dumping something at a bad price out of self-preservation.
May 8th, 2010 at 5:40 pm
Reminded me of the famous eyewitness commentary of the explosion of the Hindenburg. “OH the humanity!”
May 8th, 2010 at 6:30 pm
This draws you in like a magnet……best theatre I’ve experienced this year….thanks for the link…..here is a million dollar idea, offered free to those who have the contacts to pitch it….a reality show based on floor traders. Play the main/wall street hatred angle for all its worth…..
May 8th, 2010 at 7:33 pm
Wow. That is definitely “Old School” price movement activity in the SPU pit.
“Back in the day” (the late ’90s) a ten-handle wide market in Nasdaq futures was the norm !!
Now, of course, all the “flow” takes place on the terminals, and the trading floor, aside from rare occassions like last Thursday, has become a morgue.
btw:
Am I the only one who thinks CNBC’s video of the NYSE floor is meaningless? If the public wants to see where stock trading is taking place the MSM would have to get video footage from GETCO’s trading floor, or maybe their server room, because THAT is where “the action” is.
May 8th, 2010 at 8:40 pm
@mister_x, onefive, and cfish
Thanks for the clarifications.
As for who pushed it from 1100 to 1060, Lord Blankfein. Who else? haha
I like the reality show idea above, but not every day is this wild. What would be cool is if they had a documentary type show on the pits from 2007′s peak through the 2009 bottom and rally. There was a High Def channel (Mojo TV?) that had a Wall Street Warriors show once, but it was weak.
We could sell pit jackets with your favorite trader’s name on it. Take off the Bryant 24 and put on the Lichtenstein 2010 to impress the ladies.
May 8th, 2010 at 10:07 pm
Since traders made a lot of money of the big dip, won’t they deliberately cause “accidental” dips in the future?
May 9th, 2010 at 12:03 am
1053 = limit down level for the day.
This is wrong.
See CME for the specific limit down details — in short, you have the 10%, 20% and 30% limit down values.
Evidently Ben Lichtenstein was told by someone that 1053 was limit down. Whomever it was made a mistake.
Currently the 10% limit down is 110pts. Now, if SP opened (or is it based on the previous day’s settlement?) at 1163 (which is, from memory, pretty much where it would have been on the 6th, then 1053 would indeed be the 10% limit down.
However, the devil is in the details.
“Under NYSE Rule 80B, the 10 percent price limit is not in effect after 2:30 p.m. ET (1:30 p.m. Central Time). Therefore, after 1:30 p.m. Central Time (CT), the 10 percent limit is removed and the 20 percent limit would be in effect.”
Further,
“If the DJIA declines by 20 percent at or after 2:00, the market is closed for the remainder of the trading session.”
So, given that the “fun” happened after 2:30PM, SP was effectively open for possibly a 220pt plunge before a limit down would have kicked in … or perhaps a little less if the Dow itself happened to have dropped 20% first, effectively halting the contracts trading, before SP hit its own limit.
The actual indexes themselves …. well, I guess that’s another story — one which didn’t contain any circuit breakers!
May 9th, 2010 at 12:11 am
Whomever it was made a mistake
http://en.wikipedia.org/wiki/Fog_of_war
May 9th, 2010 at 3:32 am
@Tyler K
I don’t think Ben did make a mistake. First, I hear Ben saying the Limit was just posted. Second, The limit is predetermined every quarter, based on the average closing price of the previous quarter futures contract, that was the March S&P contract. June is trading now, and will set September’s limit. The first 10 percent limit is a 10 min timeout if the a contract is ‘Offered’ at the limit price, this case was 1053. If hit, no trading is allowed below that price but trading may continue above that price. The CME may stop trading anyway in conjunction with NYSE, if the DJIA hits their limit, even if the S&P is not at a limit.
May 9th, 2010 at 10:31 am
Here is another one. This guy was conducting a live trading seminar.
http://www.breitbart.tv/stock-market-webinar-leader-goes-nuts-during-the-crash/
May 9th, 2010 at 11:39 am
First, I hear Ben saying the Limit was just posted.
And at what time (actual; CT) was this remark/event occurring at? My guess would be that this recording started just prior 1:30CT — in which case, then whomever told Ben would have been correct about 1053 … for a few minutes/seconds at least, until 1:30CT, at which point, the 10% limit down would have been out the window, and the 20% value (220pts) would have become the effective limit down.
Second, …
dude, you are just repeating general information that can be found in the sources from the link I provided. You did not, however, address the “devil in the details” matter that I had highlighted (which can also be found within the sources to the link provided).
May 10th, 2010 at 9:57 am
@ How the Common Man Sees It & tradeking13
That second tape is such a good lesson about emotion in trading and herd behaviour.
The guy starts the session with the Dow down 400 something points and says ” we should get some good buying opportunities” and then EXACTLY AT THE LOW starts yelling “cancel all orders, CANCEL ALL ORDERS”!
May 10th, 2010 at 12:03 pm
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