I just heard an analyst on Bloomberg saying the correction is over and that a "nice" bottom has formed. I haven't heard of a "free-fall" bottom yet. Also Briefing sees the end of the corrective phase. Do they really believe this or are they just being paid to say this?
What drama yesterday around 3.20pm, SPX cash hardly moving at a critical support level (1056-1058), while the future's premium repeatedly sloshed back and forth between -200 and +400 on a time scale of a minute. The crash protection team lost that one.
We now have a perfect crash scenario.
1. Clear, unambiguous crash signal in the SPX (and probably other major indices).
2. A triggering event: Russia after all with a good admixture of other factors in the background (Asia in particular).
3. Gloom and doom spreading quickly. And it will become much worse after today's action over the weekend.
Japan, Hong Kong are still keeping up remarkably well, but I doubt that the governments will be able to keep the markets up artificially for much longer. Europe is close to capitulation already, and it has not really started yet.
How low will it go? My preliminary guess is around 750 SPX by Tuesday. I am voting for a 3 1/2 day crash. Yesterday the set-up day, delivering the crash signal, today the first act (5 - 10 %, one trading halt?), gloom and doom over the weekend, the main act/panic on Monday (20 %?) and the final drop (another 5 - 10 %?) and rebound on Tuesday. But I won't be in a hurry to buy long-term even after that. This is probably just the first leg.
Good trading or, to be on the safe side, have fun watching.
Cheers,
Phil
P.S.: I read that the point levels for the 10/20/30 % trading halts are 850, 1750 and 2650 on the Dow. |
