1. (More) Fat Fingered Foolishness
Average investors may be fleeing the stock market on account of the 2010 May flash crash, Facebook's (FB) IPO fiasco and Knight Capital's (KCG) collapse, but we here at the 5 Dumbest Lab simply can't get enough. You see, those kinds of electronic trading glitches are good for our business because we literally feed on Wall Street stupidity.
As for the exchanges, well, not so much.
Our schadenfreude streak continued this past week when Nasdaq OMX (NDAQ) cancelled 168 "erroneous" trades of Kraft Foods Group (KRFT - Get Report) totaling almost 30,000 shares that had pushed the food maker's stock up about 29% in a single minute. Kraft shares spiked as high as $58.54 after opening at $45.44 immediately after the stock opened for trading Wednesday morning. Kraft stock finished the turbulent day down 1.2% to $44.87."While it is difficult to say with any degree of certainty, it seems that this might be the case of mishandling a buy order through a 'fat finger' incorrect limit or using a far too aggressive order type or algo," said Mark Turner, head of U.S. sales trading at electronic broker Instinet in an e-mail to Bloomberg. Turner added that the exchanges, which in this case included NYSE Arca, Nasdaq, Direct Edge and BATS, handled the error in accordance with their error guidelines. Good for them. We're glad to know they can finally control a major screw-up once it gets started. As for stopping them altogether, well, not so much. And we're fine with that! --Written by Gregg Greenberg in New York.
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