Posted on 03/16/2020 5:29:02 AM PDT by karpov
...
Last week’s volatility also triggered a frenzy of single-stock trading halts, which temporarily pause trading in a company’s shares if they abruptly experience a big price move. For most large stocks, that means a 5% increase or decrease within a five-minute period.
There were 781 single-stock halts Thursday, more than the total amount for all of January and February combined, according to MayStreet, a financial-data vendor. Among the stocks temporarily halted that day were Occidental Petroleum Corp., Royal Caribbean Cruises Ltd. and Sirius XM Holdings Inc.
But it was the marketwide circuit breakers—triggered at 9:34 a.m. and 9:35 a.m. Eastern time on Monday and Thursday—that made headlines. Neither came as a big surprise to traders because stock futures that trade overnight had fallen their maximum allowed 5% in the hours before the opening bell, foreshadowing large drops in stocks themselves.
That made some traders question the value of bothering to halt the stock market. “Coming out of the open and halting right away doesn’t seem like the most optimal thing,” said Mehmet Kinak, global head of systematic trading at T. Rowe Price Group Inc.
Mr. Kinak said a marketwide halt could make sense in the middle of the trading day. For instance, if an unexpected midday news development sent markets into a tailspin, a 15-minute pause could help investors digest the news and prevent panicked selling, he said.
James Angel, a finance professor at Georgetown University who has studied circuit breakers, agrees. “Halting the market immediately after it opens is just dumb,” he said.
Some academics say circuit breakers actually exacerbate selloffs because investors may see the market approaching a halt and sell in a panic to exit trades before the level is reached.
(Excerpt) Read more at wsj.com ...
I like them, and think they should be MUCH longer. More like 4 hours instead of 15 minutes.
They give retail investors a chance to get an order placed. Otherwise, the machines will all be OUT before we can even get an order in.
They absolutely do help. They don’t stop an extended correction, but they do help prevent technical triggers where we could see 20% down days and may very well be down 50% year to date. Helping prevent panic and really bad choices like selling it all.
The only comparison we have is the Spanish Flu of 1918, where a disease caused markets to correct, a year later they recovered and began a huge 10 year gain until it ended on 1929.
Gov.Co is throwing free money at everything. The recovery will be huge and rapid. All related to the decline of new cases.
Football ball season must be saved.
The value is pretty simple... It keeps markets from going to ZERO.
You will see at least two more today, I suspect. It looks like the market will plunge at the opening, according to the ‘experts’ - futures are at below 1000. It will be an interesting day on the stock market. If you have the cash, it might be a good time to start investing (while everyone else panicing...
What a coincidence!!!
Stopping trading because the prices are changing too fast is dumb. Admit there is no solution. If people want to sell or buy, stopping them temporarily solves no problem.
“.... they should be MUCH longer....”
Yep.
#7 it ain’t people. It is computers running wild! : )
Panic may be over... My AMD is down 5.75% vs 11%+ at the beginning of the trading day.... whew!
Now I can afford to buy toilet paper.
BTW where can I find some?
Exactly. The futures tails are wagging the market dog.
AMD now down just 3.84%
Other stocks like Nvidia 8.36%, Netflix 4.45%, Apple 8.51%
I am guessing Tuesday will be green unless the federal gov’t feels the need to “help” again.
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