it's MCHVE...i have mixed up the letters a bit. it's the scientific term for Lock Limit Cluster F*ck, coined by Bob Bronson. it means "mass-correlated hyper-volatility event".
usually a BK in one market ripples through other markets as well, a BK down in stocks will e.g. almost certainly bring about a BK up in treasury bonds, down in corporate bonds, and perhaps up in gold. it's like an avalanche that gets going once a small, on the face of it insignificant event brings a system to breaking point and leads it to release all the stored negative energy at once. it then gets exacerbated by whatever leveraged and derivatives based strategies are going sour in a hurry.
it could be news of a default of a financial institution, or an unexpectedly large trade deficit number, it is hard to pin down the trigger in advance.
but while the market churns around near it's highs, negativity is accumulating, in the form of rising rates, exploding margin debt, falling cash levels at mutual funds, increasing insider selling, rising inflation, a rising current account deficit,rising credit spreads, yield curve inversion etc.
none of this, or very little of it, is as of yet reflected in the market...until the trigger event arrives, and all the negative energy is released at once in an MCHVE. |
