NASDAQ Errors Make the Technology Market Situation Even More Scary

Earlier today things got absolutely crazy with Google stock traded on NASDAQ. Throughout the day the price was quite strong and even gaining after Monday’s drop and suddenly 5 minutes before the closure it first jumped from $413 to $470 and then fell to $249 (see the graph on the left based on the minute-by-minute breakdown by Silicon Alley Insider).

It is quite understandable that many traders must have felt at the very least uncomfortable watching this plummeting but then NASDAQ reported that the reason for the plunge was some erroneous orders “triggered by orders routed from another exchange” (the responsible exchange has not been named). As a result NASDAQ has cancelled all the trades above $425.28 or below $400.52. So the closing price is now $400.52 for Google stock - and who knows what happens when the exchange opens tomorrow morning after all the discussions today and some commentators on numerous blogs that covered the story suggesting that Google may really be valuated way too high and telling this incredible price drop could be very well deserved for the internet giant.

Given the current economic turmoil everything bad does not look terribly surprising when we see it so some people seem to have believed that some stock owners started selling it in incredible volumes. Fortunately the glitch in this case was apparent so NASDAQ had all the reasons to initiate an investigation and cancel all the trades that took place at the incredible prices.

Anyway it is quite obvious that hysteria on the market is bad enough already and additional errors on exchanges are something we’d really prefer traders not to have to endure. What’s more, I think that if such a glitch happened on a calmer day, it would have hardly been noticed and people would have immediately seen it for what it was - a glitch. But when it is already bad enough people seem to be prepared to face something worse all the time - and this is what scares me on the market these days.