Potential catalysts for potential near future crash/recession

zghorner said:
So you are saying investors are more worried about a crash than traders? Seems every time I turn around someone is predicting a crash all the while the market smooth melts upwards.
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of course they are. For us, who trade in and out, volatility means potential profits. My algos only have issues during market stand still, otherwise up or down, makes no difference. Last March, many investors were sick above and beyond. Luckily, we had V recovery, followed by ATH.
 
RedDuke said:
of course they are. For us, who trade in and out, volatility means potential profits. My algos only have issues during market stand still, otherwise up or down, makes no difference. Last March, many investors were sick above and beyond. Luckily, we had V recovery, followed by ATH.
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Yea solid points.
 
Most likely catalysts:

1. War over Taiwan.

2. Withdrawal of extreme US monetary & fiscal support.

3. Unexpectedly surging oil prices leading to sustained inflation (which might force the Fed's hand to tighten, see #2) and reduced consumer spending.
 
RedDuke said:
of course they are. For us, who trade in and out, volatility means potential profits. My algos only have issues during market stand still, otherwise up or down, makes no difference. Last March, many investors were sick above and beyond. Luckily, we had V recovery, followed by ATH.
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Most investors remembered 2009 and just stayed the course. Day traders not so much many of them lost their mind for a few months. As I was shopping for bargains in March 2020 I found it remarkable how many on here seemed oblivious to what was about to happen.
 
Nine_Ender said:
Most investors remembered 2009 and just stayed the course. Day traders not so much many of them lost their mind for a few months. As I was shopping for bargains in March 2020 I found it remarkable how many on here seemed oblivious to what was about to happen.
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It's a ET thing. "Traders" here like to use charts and think they're smart, while the reddit crowd eats their lunch by posting long-form investment theses (check out the original GME and AMC posts-- they are pretty good).

Going back to market crashes -- there's always a chance of a crash, but, frankly, the crash is already here. For example, ARKK (a major tech darling in 2020) is down ~26% since it's peak in Feb (and at one point was down nearly 37%). Lumber is down 40% from it's peak last month. Copper is down almost 10%.

Now, the curve has steepened a little over the past month (10s minus 2s), which means that bond investors are expressing a lower inflation/lower growth view. This could lead to a growth scare in stocks, though growth-y stocks have already underperformed this quarter (Nasdaq 100 has underperformed the S&P 500).

The real risk is that there will be a policy mistake, which is what popped the Nasdaq bubble in 2000 (Greenspan rose rates in the face of declining economic indicators). I don't think Jay Powell will make the same mistake, but I also don't see the risk of stagflation driven by oil prices, primarily because the US produces so much oil nowadays that a shock to supply internationally would be quickly offset by increased domestic production.
 
Bulls climb a wall of worries. When the bears are winning there has a big catalyst to be in place. Can't be garmful to think about them but until news is out that there is a catalyst on the lose the bull side seems favourable.
 
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