Technical Analysis of Indian Equities by Nooresh


What happened to Dow Jones- Down 1000 points and recovers to –347 points.

There are lot many questions about what happened with Dow Jones today. I was almost asleep before i got a call that Dow down 1000 points within a minute another call saying down only 400 points.

There are many questions to be asked as to what happened like.Some are below.

Dow Jones drops 700 points in 15 minutes and recovers 600 points in next few minutes.

Procter and Gamble a fat-finger trade. Low of 39 to 58 next minute.

Was High frequency trading responsible for the Dow fall?.

Automated trading and flash orders a major systematic risk to developed financial markets.

Margin selling by automated systems would have triggered the 1000 point drop.

Many trades initiated were cancelled by exchanges as per trading desks.

How will Asian markets react to the US fiasco is difficult to guess but it seems Indian Indices are better regulated πŸ™‚ with circuit barriers for all stocks. But todays move on Dow would be historic as to what sort of shit can happen even in developed financial markets with bad regulations.

Some examples of crap moves.

One stock which was worth 13 dollars traded at a low of 0.10 or rather say 10 cents !!! in the day. Stock ticker PIE.


Procter and Gamble which is 4 % weightage on Dow Jones did a low of 39 odd from 60. Within the next minute it was back to 58. A tracking software which is a demo version – gcitrading could not even catch the low πŸ™‚ it shows 47 as low.

Its a big sham on US regulators when billions of dollars of market cap can be eroded for minutes πŸ™‚

Check the chart below


For the Sensex technically we may not go below 16500 mark ideally rest can review the situation in the morning.

Dow Jones move would be considered a freak move but whats surprising the low of 9800 odd was exactly close to 9835 of February 2010.

Will put up more examples on the historic day soon… Meanwhile google for Automated Trading and High frequency trading to know what would have triggered this. Margin Selling etc.

Article by Nooresh Merani

Nooresh has written 2737 articles.

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{ 9 comments… add one }
  • Pritesh Palan May 7, 2010, 01:00

    Thanks for the info sir, if i would not have read this article now, even i would have believed marker rumours that “heavy selling by Institutions all over the world” , “FII’s will now exit India” , “Sensex will hit lower circuit today” etc… etc…


    • nooresh May 7, 2010, 05:21

      Hi Pritesh,

      Yes markets behave in a weird manner. What was seen yesterday on Dow Jones was a height of technological advancement:)

      Hope sanity prevails.



  • Prashant May 7, 2010, 02:43

    Hi Nooresh,
    I really suspect that there is something else than trading systems problem here.

    Do you remeber during historic fall of 2008 dow was down more than 600 points in last 5 minutes on one of those days ?

    Its difficult to beleive that worlds most sofisticated systems have such issues.
    Not sure if some big fish is having some trial run or some big fish exited silently knowing some facts well ahead…
    Looks like DOW ppls trying to hide something ….

    • nooresh May 7, 2010, 05:25

      Hi Prashant,

      Its difficult to believe that sophisticated systems will have such issues. But the issues are due to the sophistication of technological systems. Automated orders being triggered took so many stocks to 40 to 4 cents. Big fish may not be so dumb to sell at cents :). Its just the reaction to what happens on repercussions of one bad automation.

      More clarity will come and sanity should prevail.




  • Akshay May 7, 2010, 03:10


    I reduced my clients leveraged positions when we received message of Dowjone pausing arnd 11200 odd levels. Now waiting for bottom fishing. Your prowess in Technical Analysis is just superb. Keep up the good work



    • nooresh May 7, 2010, 05:26

      Hi Akshay,

      Good to know you use the analysis to be cautious and are now well placed. Go ahead and be selective at 16500-16800 levels.



  • Sachin May 7, 2010, 05:19

    The big collapse at the DOW last night was an error and confirmed by the NYSE Euronext’s chief. Someone punched $16 billion for a sell order instead of $16 million. Quite a human thing but it caused its share of chaos at midnight last night !

  • bala May 7, 2010, 07:44

    fall in US mkts is a deliberate move towards 200ma, a healthy correction
    in next 1-2 months, it will make a new high

  • sanjay May 10, 2010, 05:12

    Great article.. enlightened. hopefully this never happens in indian markets.


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