Last night NASDAQ attempted to bring a bit of clarity to what was happening in equity futures and rushed to print before the poor writer had time to tidy-up the release:
Stock Futures Fell Fast Enough to Trigger a Halt
Mar 8, 2020 9:34PM EDT
The S&P 500 has three circuit-breaker levels that halt trading in an indiscriminate selloff. The first is down 7%.
The S&P 500 has three circuit-breaker levels that halt trading in an indiscriminate selloff. The first is down 7%.
The S&P 500 has three circuit-breaker levels that halt trading in an indiscriminate selloff. The first is down 7%.
Futures on the S&P 500 were halted Sunday night after they declined 5%. So-called circuit-breaker levels are the thresholds at which exchanges halt or close marketwide trading due to extreme declines. These levels are calculated daily, based on the previous day’s close in the S&P 500.
As the wild swings on Wall Street continue, here are the levels to watch for further trading curbs when U.S. markets open Monday.
Level One Breach
A 7% decline in the S&P 500 from the prior day’s close would trigger a level one breach, where trading is halted for 15 minutes.
That level for regular trading on Monday is 2764.30, a 208 point drop from Friday’s close of 2972.37.
If that level is reached at or after 3:25 p.m. ET, it would not halt marketwide trading.
Sunday night, futures on the S&P 500 tumbled as low as 2818.75, triggering a trading curb because the threshold for premarket and after-hours trading is lower than during the regular session.
Level TwoHere's an example of the same writer given an extra minute to explain in late February. Clean
The next threshold is 13%. A decline in the S&P 500 by that much would similarly result in a 15-minute halt.
To trigger a level-two circuit breaker Monday, the index would have to drop 386 points to 2585.96. Trading wouldn’t be interrupted if the drop came at or after 3:25 p.m....MORE
*From a post on market structure last November:
So You Think You Know Market Structure: "Bitcoin, ethereum and ripple: a fractal and wavelet analysis"
....And it's not just packaged product. Even plain vanilla stuff has underlying structure that can bite you in the butt.
My favorite example of that is the Hunt bros. merrily buying up their physical and derivative silver.
They didn't understand the structure of the market in which they were playing. From a long ago post:
Retold in 2014's "On The Passing Of Nelson Bunker Hunt, Two Words".....When the Billionaire Hunt brothers were attempting to corner the silver market in January 1980 the head of one of the world's largest grain traders said "Those boys don't know what deep pockets are".The "commercials" had been shorting into the Hunt bros. buying and the grain trader was at the top of the "commercial" heap.On January 21 the COMEX went "liquidation only".On January 22 the CBOT went "liquidation only".On Tuesday the 22nd silver closed at $34, down 27% from its close the previous Friday.The Hunt's still had enormous paper profits but any attempt to book them would smash the markets even further.Prices declined to $17 by March, down 66% from the January high and the Hunt's were receiving calls of $60 Million per day in variation margin. On March 27 the price dropped from $21.62 to $10.80 and one of their brokers, Bache was in violation of net capital requirements and another, Merrill Lynch was on the brink.As the attorneys got involved over the next few years, oil prices headed south, destroying the value of Daddy's creation (and the brother's piggybank) Placid Oil.Bunker Hunt filed for bankruptcy in September 1988 as did his brother and Placid.At the time the grain trader spoke it is probable that the various branches of the Hunt families comprised the wealthiest "family" in America....
Market structure, very important.
