Why cant we just grind down the way we grinded up? Everyone seems so obsessed with the huge and sudden drops that the trend that I believe has started now....may elude them after all of this settles down.
Markets rally slowly and fall swiftly. Confidence builds slowly. Fear travels at the speed of light. There won't be a "soft landing".
look at past charts on individual stocks and overall markets, notice that drops are ALWAYS more fast and severe than when they rise.
=========================== Exactly. And we dont have to crash; but downtrends are different.Personality of stocks or ES; usually changes more rthey close below 50 day moving average. ES/SPY,QQQQ went down pretty orderly much of time tues, downtrends can be tricky with sharp rallys, more so than uptrends. Afternoon late tuesday was typical disorderly downtrend; orderly am tuesday sell off was more orderly than most downtrends are.
Is the bussiness cycle... credit expansion by the central bank tends to inflate things more than it's sustainable by the economy... the crash is just the economy going into equilibrium.
What makes a crash more likely than a slow grind is that what took the market up was incremental buying and incremental adding of liquidity through leverage. While there certainly was a lot of liquidity being pumped in to the system I think that at least for the last several months liquidity was being created by using leverage and this is bourne out by the margin numbers and by the increasingly tight spreads in all manner of bond derivatives. What will take the market down hard is a repricing of risk, something that requires no selling, just a change in perception. The repricing of risk impacts the mountain of leverage which has been pyramiding in the rally as the leverage is often built of cash from selling premium in a variety of instruments. As we drop through levels positions have to come off which impact other positions etc., in other words it is a precipitated move. So far I haven't seen the panic unwinding that I expect to see if this downward move gets some teeth to it. I think a lot of people are still taking a wait and see (hope) attitude, though that could change today if we don't see some type of decent rally above at least yesterdays highs. People will be nervous gong in to the weekend at these levels.
if you build a house , you can't build it immideately, it's a steady process, but you can crash it very quickly.... same with any other process in a thing which has name "life".... very simple and plain analogy....
Today should be FUN!!! FWIW, I'll be shorting Chinese stocks today and into next week...could be very profitable. Most have doubled in the past 6 months, so there's still a long way to fall. Also, I don't see the typical investor putting money into Chinese stocks right now. Thus, upside risk is minimized. Good Luck!!!
Funny thing, in early April I was speaking with someone who decided to start investing in China, I said to him be careful most of those indexes are up over 100% on the year. Dont think he heard me, next time I see ill find out if we went all in...