Wassup?
Yes, been debating whether to cover a Short I have on, almost did in the low 40's with the idea of "night-trading", putting it back on again on a bounce. which we had already.
Spoke to some friends in the business, the prevailing thinking is a gap down once again. At this point it seems they may be correct. I sort of lean towards a day that drops from the outset somewhat then steadies and moves up from around 12, perhaps. What's been puzzling me all weekend is that thre really big drops usually hit on Mondays, so looking at the patterns for a drop after a huge Friday drop really twists me up.
I tend to think the action from Friday spills over, as a rule, into Monday morning somewhat. I have some support for this line of thought in some work done by a trader named George Angell. I believe Mr. Angell found that hard moves on a Friday Afternoon have a tendency to continue over. Sideways Friday afternoon markets do not mean so much on Mondays, but I think his work showed a propensity for trending moves to retain their direction.
Be all that as it may. The analogy to '87 may be apt but I don't think I have any charts for then, I certainly have no intraday data. To return to what I was thinking about before, all the really "good" drops this decade hit on Mondays. From what I've seen, the Tuesday rally was good as a rule.
So I don't know what to think. I'm prone to think it will not continue to drop, that it will find at least a temporary floor mid-day and come up.
The scary thing to me is, what if all the precedents are correct, and Friday was like all those other Fridays.........just a prelude to a real drop.
<we had a sharp sell-off on the Thursday prior and then the selling accelerated on Friday. >
October 27, 1997 was like that. I recall the '87 drop as well. I just don't have the charts, just checked.
The sweet irony of all this for me is I'm reading "Extraordinary Popular Delusions and the Madness of Crowds" as this is going on. Sort of like watching a Vincent Price movie in the dark and imagining that you hear the floor creak just behind you.....
Thank God I'm past the Market crashes sections, the stuff on Alchemy is bland so my blood pressure has stabilized.
-----------
So to sum this all up, I am as concerned as you are, my friend. I have no idea what is going to happen. I am going to presume that the market finds a low a few hours in then rallys. If it does then I think the market will drift lower, most likely, the rest of the week but at least the pace of the decline will abate. |
