Welcome to the new world where technical snafus and terrorism fears can move markets in a heartbeat now that the High Frequency Traders and the Algos are tied to Twitter.
A fake tweet with terror overtones caused financial markets to gyrate wildly for a few minutes midday Tuesday. The market was cruising along happily on its perma-liquidity rally track, before plunging dramatically at 12:07 p.m. CT after a fake tweet on the Associated Press' Twitter site reported that two bombs had gone off at the White House and injured President Obama.
The Dow dropped nearly 143 points and the E-mini S&P fell 15 points in a three-minute span from 12:07 p.m. to 12:10 pm CT. You can see this on the candlestick chart above shown by the long red rectangle. But by 12:17pm CT, the market regained all of its losses (shown by the green rectangle on the above chart), once the AP noted on its website that its Twitter account had been hacked and that the report was untrue. The White House also confirmed that the tweet was a hoax.
Until this week, many Wall Street bankers and traders had no access to Twitter. Despite the fact that Twitter is now where lots of breaking news happens first, most big banks shut off access to social networks on their systems for compliance and security reasons.
But that's all changed. Earlier this week Bloomberg announced that its terminal, the subscription data service (price: more than $20,000 a year) that is used by more than 300,000 Wall Streeters to look up all kinds of financial information, will include a Twitter feature.The TWTR terminal feature doesn't allow users to tweet, but it does let them read the tweets of certain news services, financial writers, economists, and bloggers selected by Bloomberg's terminal team.
Welcome to the new wacky world of social media investing. With the savvy and sophistication of the cyber hackers, this most likely won't be an isolated incident. Buckle up, it may be a bumpy ride.
Trade well and follow the trend, not the perma-bull OR perma-bear "experts." - online trading