Algorithms led to the fastest bear market in stock market history
April 01, 2020
Beth Kindig
Lead Tech Analyst
Last week, I wrote about how algorithms led to the fastest bear market in history. I explained that what’s driving the speed and severity of the bear market is the escalation of algorithmic trading, which is more prevalent than it was during the Great Recession in 2008.
March 2020 holds the record for how quickly stock prices dropped into a bear market — only 16 days after the S&P 500 Index hit its last closing high Feb. 19. The second-fastest bear market was the notorious 1929 crash that set off the Great Depression, followed by the elevator drop of 1987’s Black Monday.
Americans invested in stocks through 401(k)s and other retirement accounts may be unaware that they are part of a small minority of investors who are in it for the long run. Guy De Blonay, a fund manager at Jupiter Asset Management, said 80% of the stock market was controlled by machines during the selloff in 2018’s fourth quarter. In 2017, analysts at J.P. Morgan said “fundamental discretionary traders” accounted for only 10% of stock trading volume.
The “flash crash” on May 6, 2010, caused the Dow Jones Industrial Average DJIA, -4.44% to drop 998.5 points (about 9%) within minutes, only to recover a large part of the decline later in the day.
According to the Commodity Futures Trading Commission (CFTC), high-frequency trading “did not cause the Flash Crash, but contributed to it by demanding immediacy ahead of other market participants.”
Flash moves of nearly 1,000 points in either direction are now the new normal, with 14 occurring in the past 30 days. Four of those intraday moves were more than 9%. Trading curbs, known as circuit breakers, were hit four times this month.
Furthermore, according to Wells Fargo, robots will replace 200,000 banking jobs over the next 10 years. And Citigroup C, has formed a lab to cross-train traders and developers for machine learning and artificial intelligence.
Perhaps we will get a coronavirus vaccine or antiviral tomorrow, and business will go on as usual. Or, the opposite could happen, and things will get worse. One thing is certain: Until there is regulation, the machines will profit either way.
Read the full article on MarketWatch here.
More To Explore
Newsletter
CoreWeave Stock Soars 200% Since IPO — Can It Defy the Odds?
CoreWeave saw muted price action following the latest earnings report; yet the soft price action is rare for the AI darling. The company went public in March and has stood out as the premier IPO among
Meta Stock Emerges as a Strong Mag 7 AI Leader
The AI frenzy has investors fixated on revenue growth as proof of returns on AI spending that can be as high as $100 billion per year, depending on the company. Yet, Meta is proving that a stronger si
Updated Nvidia Stock Price Target - AI “Bubble” Narrative Ignores Re-Acceleration in Big Tech Capex
In the analysis below, my firm crunched the hard data on Q2 capex numbers and what is coming down the pipe for Q3. If you are an AI investor like we are, this is an analysis you will not want to miss
Oracle Soars After Earnings – Is ORCL Stock Still a Buy?
The market is clearly excited about this report, and for good reason. Remaining performance obligations (RPO) grew 359% YoY with cloud RPO growing “nearly 500%” on top of 83% growth last year. Another
Nvidia Stock Forecast: The Path to $6 Trillion
Two years ago, the April 2023 quarter delivered a historic 18% beat, followed by an even bigger 30% beat in July 2023. Compare that to the most recent quarter ending July 2025 — just a 4% beat, the sm
Bitcoin Bull Market Guide: When to Hold, Trim, or Re-Enter (Webinar)
Our track record including a more recent 600% move in Bitcoin is not the product of hype but of a systematic framework—one built on technical analysis, on-chain metrics, and a close watch on global li
Reddit Stock Blows the Doors Off - Can it Last?
Reddit’s stock has surged 62% in one month, easily placing the company’s earnings report as one of the best to come out of the tech sector this quarter. The world’s leading forum site has only 416 mil
ServiceNow Q2 Earnings: Inside the AI Push Toward $1 Billion ACV by 2026
Last month, after ServiceNow reported second quarter results that exceeded expectations on multiple fronts, shares of NOW rose by 6%. The company is attempting to reposition itself beyond a provider o
Is Bitcoin’s Bull Run Nearing a Top? What the Herd Missed at $16,000 and is Missing Now
In late 2022, when Bitcoin was trading near $16,000, the I/O Fund issued a Strong Buy Alert. At the time, many of the market’s biggest crypto bulls were silent. Fast forward to today, Bitcoin is up ov
Is the S&P 500 Overdue for a Correction? 2025 Forecast & Buy Levels to Watch
In our last Broad Market Report titled, Historic Uncertainty Meets $7 Trillion Dollar Debt Wall: What Comes Next For The S&P 500, the S&P 500 was trading near 5800 and still well below its February hi