"Today was a really interesting day in the US markets -- the acceleration of the selloff continues, on significantly growing volume. The downtrend is orderly, however, and any knock-on effects of HFT appear to be pretty muted from what I can tell (based on following 1m charts of the SPX, N100, DJIA, and VIX. Coming into the close, there was very little short covering, with less than 10 million shares of SPY trading in the last 2 minutes. The VIX hit 25 today, and closed at 24.96, so right near it's high. I took some profits on my shorts today, given the acceleration characteristics of this move, but barring a capitulation move would still see any retracement as an opportunity to increase the shorts modestly.

"The Facebook IPO was a flop, by the standards here in Silicon Valley. Us old-timers here in the valley were dismayed by the huge amount of shares being sold by insiders (4.7m shares, I believe the WSJ said). This FAR exceeds the customary percentages sold by insiders during an IPO, though the Venture Capital funds do normally sell some holdings during an IPO. It is NOT normal for the company executives to sell significant shares in an IPO, and the Investment Bankers usually frown upon that. I guess they couldn't frown too much this time, since they were selling also (again NOT normal). Given my personal experience with IPO's here in the valley, this felt pretty sleazy to me. This was sort of the logical opposite of how the Google IPO felt.

"Of course, a lot of that money will flow right into the valley, so that will be good for the local economy, and the huge California taxes on those in-state cash flows will help the state out, and boy does it need help.

"Your audio update last night was excellent, by the way."

Eoin Treacy's view Thank you for your kind words and this educational email. If Facebook's valuations were not high enough to instil a sense of caution, the fact that its management team are grabbing their first opportunity to sell with both hands is certaintly a warning.