Early in today’s session, GILD fell 8% in 20 minutes, an incredibly steep selling cascade for a $150 billion market cap company:
This type of price action wouldn’t be that surprising in a $5 billion social media/internet stock (like Zillow or Yelp). It only takes one big seller in a name like that to move the stock 5%. However it’s particularly concerning when it’s one of the largest stocks in the market that moves like this.
This is the second time GILD has moved 8% plus in a matter of hours in the past 30 trading days. A similar slip occurred at the start of September:
As volatility has picked up, liquidity is obviously getting pulled back, whether from electronic market makers, banks, or other market participants. It’s the classic situation of sellers trying to unload some of their inventory at the same time, so buyers quickly move their bids lower to accommodate the size that is for sale.
An intraday move of 8% in less than half an hour looks big even on a weekly chart of GILD:
Given that we have not had a major liquidity shock in several years, risk managers, traders, and even long-term investors are debating adjustments to their portfolios to minimize the profit and loss swings and tail risks that have come to the forefront in the past week.