Hi Obit,
What is going on in your opinion? I traded Forex for many years, similar case happened a lot, as soon as the head of central bank talks, if the first few word is bearish, the currency pair drop immediately like no one's business, however, forex is much easier to click the button to trade, Stock require a little more time to manage a trade, no retail trader would react this fast, I still don't understand why .
The timing and speed of an apparent reaction to an incomplete answer to a key question and the large volume of shares traded in a sharp downward price move, points to pre-planning of experienced traders and market makers with close or direct access to alternative trading systems used by the OTC markets like OTC Link, ARCA and others. There was no time for mulling over of the meaning of the sentences or making certain what was actually said.
The trades appeared to be triggered downward not by traders and investors using online broker/dealers like E-Trade, TD Ameritrade, Charles Schwab, etc. The more experienced traders of these sold before the downward movement since it would be hard for most others to make an acceptable order keep that could be matched to the falling prices that moved in significant price leaps downward. Chasing the market downward simply does not work well using these online brokers with payment for order flow set ups with market makers. The anticipation of traders/investors trying to get ahead of the falling price by lowering the selling or buying price point is an expected part of the "plan."
Many sold their shares at a low price rather than to wait for a reversal, take a paper reduction or loss and wait for the eventual rise. Others made good sell and then buy trades to lower their cost basis, acquire more shares and garner a little profit. Some bought more at lower price points. This has happened before.
Given the nature of market maker trading, the ones receiving orders in order books and doing the actual trading, the trades were lined up and initially priced and negotiated before the Warner-Mnuchin dialog began. Look at the steady trading in an extremely narrow channel during the period before 12:59 pm.
As most of the old timers know, changes in the share price of the GSEs for the past almost 4 years comes through political, legal and economic news events. Besides the loss of profit and capital reserves, the fundamentals of the GSEs have not changed. The GSEs are profitable. These ups and down are par for the course and their are traders who can take advantage of weak hands. Experienced small traders make good by holding on to coattails of the leaders.
That is all I can muster. This was watched carefully without a finger on a trade key. Clips of the hearing were made and posted.
