The report has finally arrived on the result of the flash crash on May 6, 2010 where the Dow Jones Industrial Average dropped nearly 1000 points in a matter of seconds. Allan Edwards CEO of The Markets Are Open said "I think it was more relevant to find the answer to this question before the Dow Jones dropped another 1400 points." Edwards is referring to the fact that if the flash crash was seen as a blip on the radar why did the Dow Jones trade under the flash crash levels for most of the summer.
He continued "I understand the flash trade was erratic trading, but the Dow Jones was under 10,000 following the flash crash for a couple of months so it is possible that normal trading caused it."
However Federal regulators concluded that it was a large traders use of a computer trading system to sell futures contracts which led to the event and this caused liquidity to dry up causing a massive sell off.
Edwards said this happened to Apple the other day where the stock plunged $16 dollars in a matter of seconds, but he noted now the stock trades near this price. He said if we look into a flash crash, there is only point looking into things that do not make sense.
If we see Wachovia crash from $10 to $2 and then rebound to $8 only go back to $2 a day later. Is there really any investigative work to be done here?
What needs to be looked at is the specific companies in the flash crash. How did it get Exelon and Accenture to drop to $0. These are the things that need to be looked at.
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