Tuesday, February 27, 2007

Sudden Decline in End of Day Trade Triggered by Computer Glitch

Sudden, sharp decline in DJIA around 3 due to tab delay, according to WSJ

DJ reports that the sudden, sharp decline by the Dow Jones Industrial Average shortly before 3 p.m. Tuesday was triggered by a tabulation delay by Dow Jones data systems, which calculates the average. There was a temporary lag in calculation of the 30 large-stock average due to a surge in order flows as the market continued to tumble in afternoon trading, much like a clogged pipe. Shortly before 3 p.m. Eastern, Dow Jones Indexes switched over to a backup system to calculate the average, which nearly instantly registered the huge move. The glitch wasn't the cause of the decline, but it did cause the drop to register far more quickly than it otherwise would have. Other indexes fell at the same time, but more gradually. Some traders noticed a discrepancy between futures contracts tied to the Dow industrials and the index, which directly tracks the stocks. Usually, the futures contracts closely track the overall average.

Courtesy of Briefing.com

On a personal note, my stop didn't trigger and my screen froze. I was long AAPL at $84.00 for a bounce in the last hour. At 3:45 I tightened my stop to $84.55. My stop didn't trigger. I'm still holding and currently looking at a small loss. It's hard to get rid of shares when something like this happens because all the bids dry up.


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