The Machines Took Over. At 2:45 PM, the US stock market collapsed. The Dow lost 9% of its value in a matter of minutes. Blue-chip stocks like P&G traded at pennies. Then, just as quickly, it bounced back.
High Frequency Trading: The culprit appears to be a feedback loop of algorithmic selling. 'Spoofing' and 'quote stuffing' are the new weapons of market warfare. Human traders stood by, helpless, as the machines drove the market off a cliff.
Fragility: Today proved that liquidity is an illusion. In a crisis, the HFTs pull their bids, leaving a vacuum. The market structure is broken.