tag:blogger.com,1999:blog-17206839.post7736168054633669036..comments2023-09-09T09:26:22.175-04:00Comments on Andrew Samwick's Blog: Market JittersAndrewhttp://www.blogger.com/profile/13514024573333057559noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-17206839.post-75302100956237613312007-02-28T15:38:00.000-05:002007-02-28T15:38:00.000-05:00I've heard a number of times now that there wa...I've heard a number of times now that there was some kind of glitch in the Dow reporting system that resulted in a higher-than-actual score for a while, until a sudden ~200 point correction in less than a minute. Do you think this might have anything do do with anything?<br><br>Traders who were pessimistic for what ever reason may have been expecting the market to drop, and may have traded against this expectation. If the Dow wasn't reporting correctly, then maybe they didn't get an important feedback parameter and didn't fully appreciate the magnitude of the drop. Traders may have believed the market was higher than it actually was, and continued to trade against a fall that had already happened.Jon Sheajonshea.comnoreply@blogger.comtag:blogger.com,1999:blog-17206839.post-72477796543846351652007-02-28T16:14:00.000-05:002007-02-28T16:14:00.000-05:00I just read Barry Ritholz's posts. While I don...I just read Barry Ritholz's posts. While I don't think the computer glitch was an underlying of the fall, but certainly it effected trading _somehow_. From 2:00 to 3:00 yesterday I bet some people looked at the Dow and said "Man, the market just is not dropping to where I think it should be. I'm going to sell some more stuff." That would certainly help explain why the market started to come back up immediately after the computer correction.<br><br>I'd be interested in seeing what the Dow would have looked like yesterday if it were correctly tabulated all day long. If it fell further than the S&P and Nasdaq did, then that would seem to support my view. <br><br>Indeed, from google finance it looks to me like the drops from morning value to daily minimum yesterday was:<br><br>Dow: 3.29%<br>S&P: 3.02%<br>Nasdaq: 2.52%Jon Sheajonshea.comnoreply@blogger.comtag:blogger.com,1999:blog-17206839.post-72737743852407731182007-03-02T08:05:00.000-05:002007-03-02T08:05:00.000-05:00"Typically, when there is unexpected strength..."Typically, when there is unexpected strength in the other major monthly economic releases like GDP and Employment, the market does poorly."<br><br>I think the word "typically" glosses over a lot of variation in that response over time. Particularly in the past decade, there have been times when stronger-than-expected economic releases have been seen as good news for the market. The market wants a Goldilocks economy, and depending on the what the perceived alternative is, a strong report can mean either "too hot" (Fed tightening) or "not too cold" (higher profits).<br><br>I'm not saying that this durable goods report was the main cause of the market decline, but to the extent that it did contribute, I'd say one critical aspect of it was the severity. A report just slightly below expectations might have been good news ("not to hot"), but a severe negative surprise was bad news ("too cold").knznhttp://www.blogger.com/profile/11777056267168876929noreply@blogger.com