I crash to me is when a security loses more than half of it's value, like Oct 2007 to March 2009, other wise it is a correction. There are reasons for a true crash and corrections are for making money three times, rising, falling, rising. Be thankful they happen, and if you do lose much, then hit the charts and find ways not to lose but to gain. Just another reason to not care of why anything happens inside of trading, for the water cooler are opinions.
Did anyone ever write about why we had the crash in Oct 2018?
- Thread starter RGLD
- Start date
Those increase in rates were much telegraphed before and priced in the markets. It is this statement which spooked the market
"Interest rates are still accommodative, but we’re gradually moving to a place where they’ll be neutral,” neither holding back nor spurring growth, Powell said Wednesday at an event in Washington hosted by The Atlantic magazine and the Aspen Institute. “We may go past neutral. But we’re a long way from neutral at this point, probably,” he added."
We are long away from neutral, and may go past neutral was powerful statement which was not priced by the market. You can clearly see that in yield curve. Before the speech yield curve was up&down around a flattish line. Yield curve took a dive after digesting the statement. That statement was not made during fed meeting, but in the speech later.
%%Crash? What "crash"?
1987 had a "crash day"... -22%.
The decline, top-to-bottom in Q4, 2018, took 14 weeks. Hardly a "crash".
Years ago, such a move would have been taken with aplomb as "merely noise".
.........
Good practical points; looks like M Webster agrees with you also.
Volatility... unless it's so whippy and happens so fast you can't cope.... is a good thing.
I wasn't surprised by the sell-off at all. Many people on ET have been forewarning it for years now. LOL. Joking aside - there were reasons warranting a sell-off (probably still is) and there were a decent sell-signal at the top. Technically, we were also due for a correction.
But I'll gladly admit that I did not anticipate such a strong and fast recovery. Perhaps it's simply indicative of how strong this market have been for the last 10 years, regardless of the reasons for that.
But I'll gladly admit that I did not anticipate such a strong and fast recovery. Perhaps it's simply indicative of how strong this market have been for the last 10 years, regardless of the reasons for that.
%%
Due or overdue. But Trend = friend. MARCH sell off or lack of it, sure was weak. NOT to worry ,TSLA, GE are downtrending again, again.
Thanks for this. This makes more sense then the garbage I've been reading. Do you think the fed's change in tone was a bit odd after Trump threatened to fire Powel? Powel was pretty aggressive about raising rates until then. I know Trump can't really fire him but I think something happened to soften his hawkishness on the market. It went from fed unloading their books to rumors of another QA????
I've never seen the fed change their tone so quickly. I'm 50% sure if Trump losses 2020, the market will crash. And if he wins, he'll get the fed to keep pumping up the market until his term is over.
The fact that he recommended Herman Cain to be part of the fed is an indicator he wants to control it. If you watch him on TV, all he boast about is how he helped the economy grow and S&P etc etc. He will not let the market slip on his watch. It's more political then econmical now.
Not only odd, It has set him up for failure. He (powel) was always worried about market instability and has given many statements like this from 2011.
"In response to a question about the so-called “neutral” interest rate, he said: “It’s worth noting that the last two business cycles didn’t end with high inflation — they ended with financial instability — so that’s something we need to also keep our eye on.”
https://latest.13d.com/markets-read...-inflation-financial-instability-1a042ba85c0c
Now his credibility is much lower in the next bubble. It is very difficult to walk back when action does not match with words. Traders have realized that and now bid up any and all risk assets.
Macro-ops had rehashed old quote from Stanley Druckenmiller, which is very true, atleast for US.
Druck has also said:
Earnings don’t move the overall market; it’s the Federal Reserve Board… focus on the central banks and focus on the movement of liquidity… most people in the market are looking for earnings and conventional measures. It’s liquidity that moves markets.
https://macro-ops.com/stanley-druckenmiller-on-liquidity-macro-margins/
Trump pretty much knows this and the very reason to nominate yes man to Federal Reserve.
Last edited:
%%
No i dont thinks its odd in hindsight,RGLD;
with most of USa long, most mutual funds long,+ gov wrongly trying to promise all private sector pensions .....LOL. It most likely scenerio. NO telling how many REALTORS are for low rates??
Like Jim Rogers said years ago to MODERN TRADER Mag, all the long funds will lean on Yellin[fed head @ that time]''
I was surprised early JAN , 2019,the 50 day moving average SPY held; thought it was going to bear trend again-it did not.
,