Black Monday

So, buy-the-dip people (not suprising, due to "Pavlov dog" type "education" of the past 3 yr) believe that valuations don't matter anymore?

On prior occasions, like April-05 (when DJI fell to 10k), large declines were countered by huge pumping of liquidity and printing by the Fed. Stocks stabilised and went higher and commodities soared.

Ofcourse, measured in any non-counterfeitable "currency" like gold, stocks are near their 2002 lows. If measured in oil or copper or any other base metal, stocks are much lower than 2002.

I'm not sure the market will be so forgiving to Fed printing this time, unless Fed wants to risk having a full-scale dollar crisis.

Also, since excess money nowadays immediately finds its way into commodities (oil, copper, gold, silver etc), westerners are shooting themselves in the foot, giving away their savings to oil-producing nations (it costs OPEC nations on avg $1.5 to produce 1 barrel of oil, which is priced at $75).
 
Just curious as to why a number of traders are so 'caught up' in trying to predict a market crash? A crash is an outlier event and the probability of it occurring is extremely small statistically (although it has occurred more than it should). The only two outliers of this magnitude that stick in my mind are 1929 and 1987. If i'm missing some more meaningful declines, please post.

When it comes to what happens Monday, i don't have a clue. However, if there was to be a large decline on Monday, what's the catalyst? What has significantly changed over the course of the week that has structurally changed the value of stocks that a large one time 'revaluation' is needed? Or is that the problem in itself? Nothing has changed and the background problems that have been present are finally bubbling to the surface?

Just musing to anyone out there listening. I know the action is more determined by fear and greed in the short term, but the underlying bid in any market is always provided by the fundamentals. One thing i did notice about yesterday's trading is that the markets were awash in red, the majority of stocks were down on the day.

Any thoughts?
 
Quote from plugger:

I know the action is more determined by fear and greed in the short term, but the underlying bid in any market is always provided by the fundamentals.
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So, what is the pic of funnymetals?
 
Quote from mtzianos:

So, buy-the-dip people (not suprising, due to "Pavlov dog" type "education" of the past 3 yr) believe that valuations don't matter anymore?

On prior occasions, like April-05 (when DJI fell to 10k), large declines were countered by huge pumping of liquidity and printing by the Fed. Stocks stabilised and went higher and commodities soared.

Ofcourse, measured in any non-counterfeitable "currency" like gold, stocks are near their 2002 lows. If measured in oil or copper or any other base metal, stocks are much lower than 2002.

I'm not sure the market will be so forgiving to Fed printing this time, unless Fed wants to risk having a full-scale dollar crisis.

Also, since excess money nowadays immediately finds its way into commodities (oil, copper, gold, silver etc), westerners are shooting themselves in the foot, giving away their savings to oil-producing nations (it costs OPEC nations on avg $1.5 to produce 1 barrel of oil, which is priced at $75).
More...


Nice comments. I'm not use to this much thought on ET.

Good Luck
 
Quote from plugger:

Just curious as to why a number of traders are so 'caught up' in trying to predict a market crash? A crash is an outlier event and the probability of it occurring is extremely small statistically (although it has occurred more than it should). The only two outliers of this magnitude that stick in my mind are 1929 and 1987. If i'm missing some more meaningful declines, please post.

When it comes to what happens Monday, i don't have a clue. However, if there was to be a large decline on Monday, what's the catalyst? What has significantly changed over the course of the week that has structurally changed the value of stocks that a large one time 'revaluation' is needed? Or is that the problem in itself? Nothing has changed and the background problems that have been present are finally bubbling to the surface?

Just musing to anyone out there listening. I know the action is more determined by fear and greed in the short term, but the underlying bid in any market is always provided by the fundamentals. One thing i did notice about yesterday's trading is that the markets were awash in red, the majority of stocks were down on the day.

Any thoughts?
More...

nothin' has changed a shite...fundamentals still same'n'pointin' at a strong eco, we know earnings have been strong'n'many companies raised their fcats so we'll have to wait for next earnings season results before callin' for a crash. now without any new data overtrowin' all da goodies this mkt has given us so far...we cud go down some more but we won't tumble at least for da time being..if a lot of companies will miss expectation by a mile on next qt report, then we cud enter a bear mkt but, again, u deluded if u think we doomed right now.
 
Bitstream,

I think you have something important to say but I have a difficult time with your language use. English is my second language and I worked hard to make it work for myself and others. Why would you purposefully make your speech unintelligible?
 
Quote from duard:

Bitstream,

I think you have something important to say but I have a difficult time with your language use. English is my second language and I worked hard to make it work for myself and others. Why would you purposefully make your speech unintelligible?
More...

english me 2nd language too! :(
 
Eh, we're just bored.
I doubt we'll see a crash, just a bear market with the normal pullbacks etc.:D
Like Buffett said, no doctor ever got famous by saying "Take two aspirins"
 
Quote from Bitstream:

nothin' has changed a shite...fundamentals still same'n'pointin' at a strong eco, we know earnings have been strong'n'many companies raised their fcats so we'll have to wait for next earnings season results before callin' for a crash. now without any new data overtrowin' all da goodies this mkt has given us so far...we cud go down some more but we won't tumble at least for da time being..if a lot of companies will miss expectation by a mile on next qt report, then we cud enter a bear mkt but, again, u deluded if u think we doomed right now.
More...

bro, stop drinkin da kool-aid, get a clue. In case you hadnt noticed, interest rates been upticking for a few years now, dollar is cratering again and the tech leaders have all dumped hard. Besides, you and everyone else are long and doubting the sell off at the end of the week. You'll probably get bailed out again, but why press your luck when the world has lost confidence in the US dollar and its leaders.
 
You're right in stating that a "crash" is a low probability event. It's the equivalent of "double sixes" in dice. However if there's any competitive/gambling backgammon players here, you all know how often the series of "statistically improbable" rolls comes up to bite you. Here's my lengthy thoughts.

The October 19, 1987 crash of 21% is the Joe DiMaggio hit streak of one day declines. We'll NEVER break that hard in a single trading day again. This market has yet to get so parabolic on the upside, nor PE's high enough so that 20% would just be a retrace back to the mean. That being said, I see some parallels that could bring on a quick 10% flush. Reasons for the 1987 crash are given as follows.

1. Sudden uptick in interest rates (although no where near to the high rate levels as seen in 1981-84)

2. A restrictive Fed led by a two month on the job Chairman, Alan Greenspan.

3. A weak dollar. Treasury Scty. Baker warned an audience prior to the 19th that further dollar erosion would be inflationary.

4.October 16, 1987
Iranian missiles hit a U.S.-flagged tanker off of the coast of Kuwait. Only five months before, an Iraqi missile hit the U.S. frigate Stark, killing 37 sailors.

5. Gold and other commodities spiking higher.


6. Historically astronomical PE's.

7. Federal budget deficits.

Hmm. How many of those 1987 concerns are being echoed now? Almost all of them! The only one not, is arguably the most important though, that being price/earnings. So yea, I think on one of these sharp breaks off the highs the market will turn down for "keeps." I look at the Naz as being in a 50% of recovery phase post 2000/(1929) ala 1933-1937. IMO the DJIA is in a 1960's-70's chop with 11,000 as the same kind of "benchmark" 1000 or so was then. I think the Dow could trade on each side of 11,000 for years. Hell it's ALREADY been years, LOL. So I'm fully prepared to see a Mch/Apr of 2005 type break as an inevitable hiccup.

So in short, I know the market is capable of jamming higher but I also know that someday one of these leisurely late week "corrections" will lead to a quite painful Monday for complacent longs. Whether it's this Monday or not, a "double sixes" is ultimately looming.


Quote from plugger:

Just curious as to why a number of traders are so 'caught up' in trying to predict a market crash? A crash is an outlier event and the probability of it occurring is extremely small statistically (although it has occurred more than it should). The only two outliers of this magnitude that stick in my mind are 1929 and 1987. If i'm missing some more meaningful declines, please post.

When it comes to what happens Monday, i don't have a clue. However, if there was to be a large decline on Monday, what's the catalyst? What has significantly changed over the course of the week that has structurally changed the value of stocks that a large one time 'revaluation' is needed? Or is that the problem in itself? Nothing has changed and the background problems that have been present are finally bubbling to the surface?

Just musing to anyone out there listening. I know the action is more determined by fear and greed in the short term, but the underlying bid in any market is always provided by the fundamentals. One thing i did notice about yesterday's trading is that the markets were awash in red, the majority of stocks were down on the day.

Any thoughts?
More...
 
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