Chasing The Same Signals - How Black-Box Trading Influences Staock Markets From Wall Street To Shang

The worst stock market crash since Black Monday during October of 1987 occurred during the first week of August of 2007. But nobody noticed. On the morning of August 6th 2007, investment professionals were baffled with unprecedented stock patterns. Mining sector stocks were up +18% but manufacturing stocks were down -14%. It was an extreme sector skew yet the S&P index was unchanged at +0.5% on the day. The next few days would continue with excessive volatility. MBI Insurance, a stock that had rarely attracted speculation would finish up +15% on Aug 6th, followed by another +7% on Aug 7th, and then finish down -22% over the subsequent two days. The brief rally in MBI was short lived.