It’s wild out there on Monday morning.
Dow futures were down as much as 700 points, the S&P 500 was down about 4%, while the Nasdaq fell 5%, triggering a “limit down” brief pause in trading.
And while we’re still a bit away from the point at which the S&P 500 would stop trading for a period, Dave Lutz at JonesTrading circulated the “circuit breaker” levels at which the S&P 500 would be halted.
In an email on Monday, Lutz wrote:
A cross-market trading halt can be triggered at three circuit breaker thresholds on the S&P:
7% (Level 1), 13% (Level 2), and 20% (Level 3).
These triggers are set by the markets at point levels that are calculated daily based on the prior day’s closing price of the S&P 500 Index.
A market decline that triggers a Level 1 or Level 2 circuit breaker before 3:25 p.m. will halt market-wide trading for 15 minutes, while a similar market decline “at or after” 3:25 p.m. will not halt market-wide trading. A market decline that triggers a Level 3 circuit breaker, at any time during the trading day, will halt market-wide trading for the remainder of the trading day.
Level 1 = ~1832
Level 2 = ~1714
Level 3 = ~1575
Right now, the S&P 500 is set to open at around 1,900 after trading as low as 1,890.
At this price, the S&P 500 is in a correction, defined as a 10% decline from most recent highs, but we’re still about 70 points away from the first circuit breaker.
So this is still a ways off, but something to keep in the back of your mind.
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