It looks like several market bubbles are breaking at once. Investors are selling risky assets and moving to the safety of gold and US treasuries. We just had the biggest intra-day loss since 1987. The Dow was -1000 at 3pm.
The VIX jumped 10 points for a 43% increase. Quality spreads widened an unprecedented 8% in one day. The 3-mo./10-yr. spread has been narrowing for several weeks. All of this is bad news for stocks.
While all 30 Dow stocks falling in one day usually suggests a buying opportunity, the bond market says, "No!"
3 comments:
My take on the 1000 point drop of yesterday:
1. Confirmed: this is a professional traders market. Making perhaps 70%+ of the daily trading volume.
2. My suspicion about the dearth of up volume have been confirmed.
3. Support levels of the program trades have been reveled -- which is very illustrative! My thanks go out out to the program traders.
Kumba;
Can you expand on the program trading? What indications do you get of this. I want to learn more, if you could point me in the right direction.
I too believe that the selling was intentional and triggered stops, after stops.
I was watching the S&P, and the volume (professional) was staggering, especially the stopping volume (close to 200,000 contracts at the ask in two minutes at 2:45!!)
Enjoyed reading your comments.
Jetus:
Only a professional (hedge fund, prop. trading firm, etc) could have put up the kind of volume of shorts or put contracts to over power so many holders. The VIX was very low. R2 stops had to have been moved up. see: stop hunting
I was short at the time and made 20% on a small position. Proof that you need to believe in yourself.
Nassim Taleb's book is illustrative. Black swans aren't so rare.
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