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
TheStreet Open House

'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) 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), 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."

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,265.99 +109.14 0.64%
S&P 500 2,011.36 +9.79 0.49%
NASDAQ 4,593.4250 +31.2360 0.68%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs