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I don’t know who/what started the rout today, human beings or machines. But conditions were ripe for selling from both sources.

On the human side, investors were looking at gains of 50% or more in the last month in stocks that had been crushed by the coronavirus recession. If you were up 50% in American Airlines (AAL) or MGM Resorts International (MGM) or Six Flags Entertainment (SIX), taking profits had certainly crossed your mind. You might now have been ready to sell yesterday or today, but sell orders were lined up in your portfolio for execution.

On the computer side, while it had been enjoyable to ride back to something very close to the February 19 closing high for the S&P 500 at 3386 (the close on Friday, June 8 was 3232), selling into the rally and maybe even shorting was increasingly looking like the best way to make money going forward–in the short term.

Computers didn’t have any emotional investment in buying versus selling. They were programmed, though, to look for any signs that the rally might be flagging and that, for a while, the best way to make money was by selling.

The reaction to the Federal Reserve meeting on Wednesday would have certainly set computer antennas quivering. The Fed had promised a huge program of asset purchases ($120 billion a month) and that it would hold benchmark interest rates near 0% through 2022 and it still wasn’t enough. The S&P 500 dipped 0.53%.

Today, computer traders got an inkling at the open that the market might be vulnerable to the downside and that the “money trade” might be to bet on stocks going lower. The S&P 500 opened at 3124, lower than the previous day’s close at 3190.

As the day wore on, the news didn’t get horrible. The Initial Claims for Unemployment number came in around the expected 1.5 million new claims for the week. The tide of new coronavirus cases in states that had opened their economies the earlier continued to move upwards. But the news wasn’t significantly worse than it had been last week when the market moved higher.

But those downside trades kept working and that kept pulling more and more investors, human and machine,  onto the sell side. Shares of American Airlines, for example, which had been down to $14.99 at noon (from $$17.02 at the prior day close) just kept moving lower after an early afternoon rally failed. The stock closed down 15.51% for the day.

One of the things that happens on a strong down day is that selling gradually spreads as computers discover that they can make profits by going short some of the market’s favorites and investors decide to protect profits. So Microsoft (MSFT), one of the best technology performers this year with a 25.47% gain in 2020 as of yesterday’s close, give back 5.37%. That $10.57 a share loss only took the stock back to its price on June 5. (You’ll also notice that gold and gold stocks fell today. That’s often the result of a big down day as traders have to sell something to raise cash for margin calls.)

The question of the most interest here is What happens tomorrow?

My best guess is that the computer programs will begin the day by testing to see if there’s more money to be made on the downside. Some individuals will try buying in hopes of a bounce. And the balance of power will be in the hands of those individuals with big recent gains who will spend tonight trying to decide whether to sell to protect those gains or to buy on the dip. I’d bet that we’ll see some early morning buying on the drop but that it will be hard ahead of the weekend for the upside to prevail.

Especially if the computers are making money to the downside again.