Why... PPT and FED will come out firing, new money will BUY stocks at these levels 1250 ES. The real crash will come when it is realised that the cost of business credit is to sky rockets for based on further defaults from falling house prices and banks further massive losses. There is a 450 Trillion market out there that can really hurt. Thats soon. Feb 08...dunno I expect Sp500 2002 lows to be breached.
What bothers me is that many seem to expect a huge bounce off of a low (like 1987) soon; is this keeping a temporary floor under the market? (more of a rhetorical question, I don't expect anyone to actually know the answer).
I think what makes this situation difficult to analyze is, that foreign money is buying our debt, supporting our markets, and even oil money is trying to rescue the financials. What could send this market down further is not within our shores or borders. That is what makes the selloff we have seen overseas so imposing. Add to that the NYSE is not the market it was just a couple of years where specialists could stabilize individual issues in the short term, particularly the Dow 30 which could quell an overall sell off. And to that Bush and Bernanke do not have the ability to offer words that instill confidence as last week proved.
There has been 21 years of mental conditioning, similar to Pavlov. When circuit breaker levels get reached/breached, pain will begin to take hold. FWIW; ES came within 10 pts and YM within 120 pts of the 5% overnight collar limit. Of special note, was the holiday shortened overnight session with no cash session at all. For those interested, here's the US index futures (CME/Globex) circuit breakers... http://www.cmegroup.com/trading/equity-index/files/EquityIndexPriceLimitGuide.pdf Good trading to all Osorico :eek: