I should add yesterday was a day I knew something was wrong when all the resource stocks I owned were down heavy for no reason I could think of. I mean Fertilizer prices were higher and the stocks were upgraded but they all got killed by like 5-15% from IPI to MOS to CF. I assume it was the market saying demand destruction was around the corner.
How was this crash obvious?
- Thread starter Aj2014
- Start date
- IMF downgrade of growth
- Fed rate hike path (market is pricing in close to 10)
Major sell offs are usually driven by shocks to growth expectations, policy surprise (monetary), drop in risk appetite (high existing vols), and liquidity.
- Fed rate hike path (market is pricing in close to 10)
Major sell offs are usually driven by shocks to growth expectations, policy surprise (monetary), drop in risk appetite (high existing vols), and liquidity.
You mean the same people who said short here at the bottom of the range 3-4 times already this year ? And what is this "huge down move" ? A move down that is equivalent to moves up that preceded it ? We are still in a range. At least let something break the range before you start claiming something big occurred. All we've seen on here is reactionary day traders predict huge moves down all year. They do it when markets go up, when markets go down, when markets are flat. Let's not pretend there is some insight or perspective going on. Some are so delusional they've been doing it nonstop since April 2020.
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Given my trading style, this is what I saw.
Obvious? No, but certain parts of the drop were predictable. The SPX dropped 230 points, the first 40 or so was very predictable. On Thursday we started with a 2nd upgap (first one was on Tuesday) that usually fills the same day. So down to 4460 had a big probability for Th-Fr.
Then once the 15 minutes lower Bollinger broke the next one was the hourly at 4420, that is where I expected a bigger bounce. There was a short lived 15 points bounce only.
Now earlier there was an established sideways channel 4380--4460 (for 5 days). We broke upward out of it on Wednesday, and then we came back to it on Thursday. The rule is when this happens price moves through the channel quickly to the other side. So 4380 and below was still expected, but after that (how much below) I don't have an explanation.
Edit: There was a mini channel on top of this big one 4455-4485. The decline actually started in the last 3 hours of Wednesday but the positive Tesla earnings pulled the market up temporarily.
Of course this is hindsight, but you wanted an explanation so I provided a partial one...
Then once the 15 minutes lower Bollinger broke the next one was the hourly at 4420, that is where I expected a bigger bounce. There was a short lived 15 points bounce only.
Now earlier there was an established sideways channel 4380--4460 (for 5 days). We broke upward out of it on Wednesday, and then we came back to it on Thursday. The rule is when this happens price moves through the channel quickly to the other side. So 4380 and below was still expected, but after that (how much below) I don't have an explanation.
Edit: There was a mini channel on top of this big one 4455-4485. The decline actually started in the last 3 hours of Wednesday but the positive Tesla earnings pulled the market up temporarily.
Of course this is hindsight, but you wanted an explanation so I provided a partial one...
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I completely agree with your statement. The key difference between my statement and yours is that I wrote "any given day" and you wrote "over time". The market is absolutely not random.
As an example, I feel like "over time"... the market is going to go up. Monday could be down another 2-3%, up 2-3% or flat. I have no idea.
My personal GUESS based on how everything sold off was that one or more large holders of equities was shifting their holdings over the last few days. Thursday morning started out moving up around 1%. With no precipitating event or substantive news, the market quietly turned and sold off in a very orderly fashion from there until the close Friday. When this scenario has happened in the past, sometimes a few days later we hear that some institution moved billions and billions in equity to another asset class. Since they are moving so much, they just slowly and methodically deal it all out there until the transaction is done. Are they finished? I have no idea.
