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Why did stocks fall on false rumor

Discussion in 'The Okie Corral' started by bill123, Apr 27, 2013.

  1. bill123

    bill123

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    Ok,
    There was a false rumor that White House was bombed and Obama injured. Stock market dropped.
    Why did that happen. Is it because the market likes stability? Personally, that event would not have caused me to make trades
     
  2. Z71bill

    Z71bill

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    Computer high frequency trading is my guess.

    This is how it works -


    Organizations have computer systems that "read" the news stream - in real time -

    The computer program picks up certain key words then it automatically executes preprogrammed trades.

    I will guess the word BOMBED means SELL

    The programs also follow momentum - so when stocks drop they sell even more -

    It can be a circle - bad news = sell which causes the market to drop - market drops creates more sell orders - market drops more - so more sell orders.
     
    Last edited: Apr 27, 2013

  3. Narkcop

    Narkcop

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    I understand what your saying because this administration is so anti free market & oppressive.
     
  4. Bruce M

    Bruce M

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    I am not sure exactly why the stocks fell on the false rumor but I imagine the same reason is why the stocks rebounded quickly after it was determined the rumor was false.
     
  5. Glotin

    Glotin

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    The market hates uncertainty. A bombing at the WH would create a hell of a lot of uncertainty, and be negative for the country in general.
     
  6. Patchman

    Patchman Florist

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    From what I head on news reports, it was those damn computer trading programs that monitor real time "news"... The human traders cautioned that sites could be hacked. But the programs refused to listen or believe.

    Skynet.
     
  7. Gunny Lingus

    Gunny Lingus Think it moved

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    The market is driven by fear and greed. A lot of folks are predicting a correction in the next couple months, some are predicting a lot worse thanks to Bernanke. Any significant catalyst can be catastrophic right now. When bad news hits, it's a race to get out to prevent major losses.
     
  8. jtull7

    jtull7 Pistolero CLM

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    Stocks have been falling and rising on false rumors since stock markets were invented. And it will never end.
     
  9. CAcop

    CAcop

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    Like others have said the markets like stability. Even if they do not like Obama and his policies he is predictable. President Biden? Or if they get #1 and #2 in a bomb it would become President Boehner. What would his policies be? Would the Dems pitch a fit about it? Then there is the uncertainty over who set the bomb? Is it a lone wolf or state sponsored terror?

    This thread makes me want to go to Google to see what the market did with the Boston bombing.