Last week was full of difficulties for investors, as they experienced a 250+ point fall in the DOW, an exchange crash at the NYSE and world events that will have a significant impact on the investing climate for months to come.
The NYSE had to halt trading for over three hours and cancel all open orders or route them to an alternative venue for execution. There has been a lot of speculation about the details surrounding the exchange crash, and the New York Stock Exchange has not revealed all the details involved. However, the problem was due to a technical malfunction that required the NYSE to stop all system activities and reboot their entire system.
Alternative exchanges stepped in and processed trades of NYSE listed holdings, which did limit trading disruptions. The NYSE insists the system problems were due to technical connection issues to the internet, but other large corporations suffered system crashes almost immediately before the NYSE went down. This would seem to point to perhaps malicious network attacks as a factor, but this has not been verified by any of the companies involved. United Airways had to shut down operations for almost two hours just before the NYSE had its system failure occur.
In addition to system technical failures at the NYSE, the Chinese markets experienced a market crash, although this was not due to system problems or technical errors. The crash was simply a standard selloff that triggered a market wide asset price crash. Hong Kong and Shanghai markets both saw drops of almost 6% due to panicked investors.
As if the problems above were not enough for investors, the world financial markets also watched as Greece ATMs run out of cash and politicians in Greece scramble to hold off a total collapse of their economy. The situation is ugly in Greece and currently Greek stock markets and banks are closed. This will most likely be the case until the Eurozone politicians and regulators can meet and attempt to find a path of resolution. Germany is a large factor in the outcome of Greece’s situation, but created further uncertainty by turning down an option to restructure Greek debt.
The market volatility has many investors concerned and staying out of the market until things stabilize. However, investors rely on long-term outlooks and fear market depressions that remain over long periods, which is much different from what traders rely on. Traders like Timothy Sykes and many others attempt to take advantage of market fluctuations regardless of the market going up, or down. Of course, trading is not for the faint of heart, as traders can see sometimes see hundreds of thousands or even millions of dollars in value changes in only a few short minutes of trading.
As the week for the markets wraps up today, the Greek situation remains an issue to watch. Additionally, it will be interesting to watch for any additional “technical” disruptions next week, as it could tell us a bit more about what happened in the markets this week.