>>the only thing that makes me think a crash is possible is the program traders - I've heard that was the actual reason for the '87 crash.<<
That is what the headlines said. A congressional hearing and studies done by the SEC showed that was not the case.
In 1987 program trading was running about 13% of all trades on the NYSE on a daily basis. On the crash day it ran up to 16%. One thing to remember is that back then most program trading was for arbitrage - looking for discrepancies in the market.
Today program trdaing runs over 50% on a daily basis. Arbitrage is only about 10-11% of that. Today program traders make money on small movements of the market many times a day. If you look at a weekly chart of the S&P 500 you will see that index volatility has been less as program trading has picked up. These prohram trades give high minute to minute volatility but tend to calm the market on a weekly basis. The program traders work on trading 'ranges' and a straight down move is not as profitable for them.
I think the program traders will cause us to have less of a chance of a sharp one day crash. Since 1987 the government sponsored 'the working group' commonly known as the PPT will not let it happen. In my opinion, the 'crash' will be very orderly.
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