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Fatfingers and Glitches Bring Down the Market in Heavy Volume

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European Debt Crisis of 2010

Today was unlike any other as panic struck the market with a ton of bricks.  The day started off just fine, but it wouldn't take too long before sellers grabbed onto the Greek riots as a reason to sell.  Short sellers, without an uptick rule were able to keep up the selling even after the news out of Greece passing its tough measures.  Then the famous "glitch" caused a domino effect that will be remembered for many years to come.  Once the market came to its senses and bounced well off its lows.  The damage was done, charts broken, and a new event that will be referenced in the history books.

The market was clearly heading lower, we were in correction mode and today's movement proved the level of fear.  Even with the market in oversold territory we know that markets can get much more oversold.  At the lows the NASDAQ took out its 200dma and corrected more than 14%.  It was darn right scary for many folks who unfortunately panicked during a time, like most of us at Big Wave Trading been in cash or with a few shorts.  When you fail to listen to the market and trade what you see rather than what you feel or think.

The European Debt Crisis, much like the Asian Currency Crisis will live on in eternity as a warning about what happens when countries outspend revenues for far too long.  We could very well see other countries, even ours go through similar reaction to what is happening in Greece.  While it is a noble thing to help out as many people as you can, but at some point you can only spend so much money before you can no longer spend it.  This is precisely why you can not, and I mean can not rely on anyone or anything but yourself.  Plenty of subscribers here have taken the first step by taking control of their financial futures.

Going forward, many charts have had plenty of damage and it will take many months to repair itself.  It isn't a bad thing to have the market work itself through this situation.  We may even take out today's low in the coming months.  The market was already in a correction we just increased the probability the correction will last more than a few weeks.

Stay disciplined and enjoy your weekend!