Yes this is the kind of action at tops that start bear markets. The kind people ignore. And the brutal short covering rallies get mistaken for real buying until the next lower low is made. When the next recession comes we will eventually retest the 1560-1600 level. Call me crazy to claim a 45% decline but the recent actions validates how fear is stronger than greed and just like a market overshoots on the way up and it can and will on the way down. The market is designed to f$ck the most people most of the time. When everyone and their mom is making double digit returns it tells you the dynamics are out of whack and will eventually revert back to the mean.
Yea but look at the past two down week's volume compared to the prior up week's volume. As for SMA's, although some funds watch them and CNBC and the rest of the ill informed media mention them often you do know they are purely coincidental. Look at the move down from top - blew right through the typical lengths 20, 50, 100 and went slightly (so far) below the 200. Even if the bounce continues it is highly probable lows will follow and which would mean 200 SMA support was just an illusion. Those who use them only look at the times they "work" not all the others times they don't.
The 2000-02 bear market chopped off just over 50%, 2008-09 chopped off 57%. 45% would be right in line with it and would simply be re-testing the 2000 and 2007 highs.
It is the first time in years that shorts found some downside acceleration away from entry. Even in 2015-16, until the sharp January break there was a lot of time spent re-testing upper resistance areas. This is also why a parabola is deadly because the breaks are fast and furious and catch the complacent investors/bulls flat footed.
Market price declines effect economy and economic data and vice versa. Chicken or egg...it doesn't matter.....it is incremental and it is a loop . Not to say it will continue but it can. Stock metrics and valuations, for better or worse , change as well. Prices and conditions are re evaluated each moment. Trend and momentum can develop. Technicals didnt arrest the fin crisis downward momentum ....it was forward accepted fundamental evaluation of banks profitability......Maybe.
Not crazy, but why exactly 45%? The last two major declines were -57,69% (909,30 points during the financial crisis) and -50,50% (784,24 points) when the dot com bubble burst. Considering that we're up 330,85% (2206,08 points) bottom to top from 2009 I don't think a correction of some size is uncalled for. We've had quite a few 10-30% corrections even on this bull run up, but none as fast as this one, I think.
Fed money printing affected price appreciation. This probably isn't "it" yet but at some point in the future the price will have to be paid.
-45%? Cmon, that's like 1580 guys. I'm on the bearish side of this house of cards but even I don't think we're going to just end a 9 year old bull market (even one based on monetary games) in a month. A more realistic area is 2200-2400 and then we go from there.
I have a feeling we start Monday on an extremely high point with futures up between 1-1.5%!!!! Kept a few long positions going into Friday...very small positions just to catch some of the bounce but will say the markets are going to be dropping further.....ibacti I actually hope the markets bounce 5% higher this week so I can add even more short positions