If a Sizable Correction Were To Take Place, What Would be the Reason?

Discussion in 'Trading' started by shortie, Feb 17, 2011.

If a Sizable Correction Were To Take Place, What Would be the Reason?

  1. Geopolitical Problems

    13 vote(s)
  2. No More QEs

    15 vote(s)
  3. Disappointing Earnings

    2 vote(s)
  4. Strong Possibility of Rising Interest Rates

    6 vote(s)
  5. Technical Glitch (similar to Flash Crash)

    2 vote(s)
  6. Profit taking

    11 vote(s)
  7. High Unemployment

    2 vote(s)
  8. Other

    14 vote(s)
  1. This is not a market timing poll. Let's assume that the correction in question will take place in 2011.
  2. "Revolution Contagion" in Saudi Arabia, or Russia, or .... ?
  3. Lucrum


    Net selling.
  4. Maverick74


    Very bullish news. You need really good news to get hard selloffs. Why? Because you need people to buy all the way down. People don't buy selloffs on bad news so they tend to end quickly.
  5. Crispy


    I voted "other".

    Most events in a sustained trend that should counter the move from a "common sense" point of view will get brushed off. And said trend will most likely continue.

    Other - Act of God/natural disaster. Or something completely off most everybodies radar. The unexpected...
  6. Locutus


    This isn't how it works. The April 2010 "crisis" was totally not off everybodies radar at all. In fact the news had been reporting about it a bit in the weeks leading up to the correction and increased coverage during. However if you were paying attention you definitely could have seen that one coming.


    There is a 100% correlation between bailouts of countries and their treasuries needing to pay more than 7%. So this is definitely unsustainable.
  7. I would lean towards global economic events in combo with geopolitical events to produce a sizable correction or a volatility spike that produces the next leg up in the trend.

    A meteorite the size of a major city heading/nearing the earth's atmosphere would do it too.

  8. Crispy


    Your opinion Sir or Maam. And I hope since you were aware of the impending move you profited accordingly.
  9. The reason might be a process such as:

    1. Initial state: profit taking.

    2. Step 1 initials a bear leg, which bears reinforce by selling rallies.

    3. CEOs delay their spending/hiring plans to wait to see how a retreat looks like. They make cautious statements and lower their guidance.

    Also stock fundamental decrease because of lower stock prices.

    4. General public feels step 3 via hiring and firing, and also in their quarterly statement-->educed spending, and market repricing.

    5. Gov initiates help programs which makes late bears more emboldened to sell short.

    6. General public sells. Market overshoots, smart money buys, while current ET bulls sell to the stop pain and join the end of the bear leg.

    7. End of bear leg.
  10. the only reason you are asking is to try and deflect from the fact that 90% of you were bearish all the way up
    #10     Feb 17, 2011