Joined Nov 11, 2007
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Mini Flash Crashes On the Rise

“There may not have been any major market malfunctions recently, but mini flash crashes still happen nearly every day.

Stock exchanges don’t publicly release data about these mini crashes — when a stock rapidly plunges then rebounds — but most active traders say there are at least a dozen a day.

Dennis Dick, a proprietary trader at Bright Trading in Detroit, said he stopped tracking them because they happen so frequently.

While none have been as disruptive as the “flash crash”of 2010, or the ones that marred the IPOs of the BATS exchange and Facebook in 2012, they highlight the fragility of markets increasingly dominated by high frequency traders who count on fancy algorithms to make a quick profit.

So far this year, these mini crashes have taken place in shares of Apple (AAPLFortune 500), Berkshire Hathaway (BRKAFortune 500), insurance broker Aon Plc (AON,Fortune 500) and apparel maker Hanesbrands (HBI).

On Jan. 25, Apple’s stock plummeted nearly 2% in the last minute of trading, with roughly 1 million shares changing hands. That’s nearly 10 times the volume during any other time that day, and the move briefly wiped out as much as $7 billion of Apple’s market value. Apple managed to recover more than half of that in the final few seconds of trading.

Other publicly traded companies have experienced even more extreme swings. On Feb. 5, Hanesbrands’ stock dropped 3% in less than half a second before quickly rebounding…..”

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