This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

'People Don't Trust the Stock Market Anymore': Street Whispers

NEW YORK ( TheStreet) -- Whatever regulators say after today's so-called flash crash, individual investors will keep streaming out of the market as computer trading complicates trading, said Joseph Saluzzi, a co-founder and co-head of equity trading at Themis Trading.

"Every time this happens, it destroys investor confidence even more," he said. "People just don't trust the stock market anymore."

Quotations in nearly 150 stocks on the New York Stock Exchange went through wild swings today as computer-generated high-frequency trades flooded the system. Trading on some of the biggest companies -- including Radio Shack (RSH), Goodyear Tire & Rubber (GT - Get Report) and Dole Foods (DOLE) -- were among those affected.

The original flash crash occurred in May 2010, when U.S. stocks tumbled, pushing down the benchmark Dow Jones Industrial Average by about 1,000 points, or about 9%. Stocks recovered shortly afterward.

After today's crash, traders quickly pointed the finger at Wall Street powerhouse Knight Capital (KCG - Get Report), which took responsibility and blamed a "technology issue" in its market-making unit.

The NYSE said it's reviewing "irregular trading" but the market's circuit breakers kicked in to shut down the volatility.

Shares of Knight were being punished following the fiasco. They plunged 23%.

Despite the assurances that Knight and the NYSE are on top of the mini-flash crash, Saluzzi said the damage is already done, adding that average investors are realizing they have no chance against computer trading in the market's current form.

"This is about the lack of checks and balances and market structure, said Saluzzi, whose firm is based in Chatham, N.J. "High-frequency trading is killing the equity markets and the core of our economy."

Saluzzi doesn't hold out much hope that anything will change.

"They need to bring back real market makers with real liquidity," Saluzzi said of the NYSE. "But you may get some blue-ribbon panel to put out a report in five months, but nothing will get done."

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
DOLE $0.00 0.00%
GT $27.88 0.54%
KCG $13.52 0.22%
RSH $0.31 12.76%
AAPL $93.24 -0.41%


Chart of I:DJI
DOW 17,660.71 +9.45 0.05%
S&P 500 2,050.63 -0.49 -0.02%
NASDAQ 4,717.0940 -8.5450 -0.18%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs